SFL – Update on Seadrill restructuring

SFL Corporation Ltd. (NYSE: SFL) (“SFL” or the “Company”) owns three drilling rigs on long-term charters to subsidiaries of Seadrill Limited (“Seadrill”). 

Seadrill has announced that it has entered into forbearance agreements with certain creditors in respect of the group’s senior secured credit facility agreements, senior secured notes, and guarantee facility agreement in connection with Seadrill not making certain interest payments falling due in September 2020 under its senior secured credit agreements.

Seadrill announced that the forbearance agreements allow Seadrill and its stakeholders more time to negotiate a comprehensive restructuring of its balance sheet. Such a restructuring may involve the use of a court-supervised process.

Seadrill has paid the charter hire for September 2020 relating to the three drilling rigs, and the leases are not part of the announced forbearance agreements. The non-payment of interest by Seadrill in relation to its bank debt does, however, constitute an event of default under the leases and in the corresponding financing agreements, where SFL has provided limited guarantees. Unless cured or waived this could result in enforcement of such cross default provisions under the leasing agreements and corresponding financing arrangements.

The harsh environment jack-up rig West Linus and the harsh environment semi-submersible rig West Hercules remain on their respective contracts with oil majors in the North Sea. The semi-submersible rig West Taurus is currently in lay up in Norway.

We continue to have a constructive dialogue with Seadrill and the banks financing the three rigs, in order to find a balanced solution.

September 17, 2020

The Board of Directors
SFL Corporation Ltd.
Hamilton, Bermuda

Investor and Analyst Contacts:
Aksel Olesen, Chief Financial Officer, SFL Management AS
+47 23 11 40 36
André Reppen, Senior Vice President & Chief Treasurer, SFL Management AS
+47 23 11 40 55
Marius Furuly, Vice President, SFL Management AS
+47 23 11 40 16

Media Contact:

Ole B. Hjertaker, Chief Executive Officer, SFL Management AS
+47 23 11 40 11

About SFL
SFL has a unique track record in the maritime industry and has paid dividends every quarter since its initial listing on the New York Stock Exchange in 2004. The Company’s fleet of more than 80 vessels is split between tankers, bulkers, container vessels and offshore drilling rigs. SFL’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.sflcorp.com

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 SFL management’s examination of historical operating trends, data contained in the Company’s records and other data available from third parties. Although SFL 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, SFL 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 the forward looking statements include the strength of world economies, fluctuations in currencies and interest rates, general market conditions including fluctuations in charter hire rates and vessel values, changes in demand in the markets in which we operate, changes in demand resulting from changes in OPEC’s petroleum production levels and world wide oil consumption and storage, developments regarding the technologies relating to oil exploration, changes in market demand in countries which import commodities and finished goods and changes in the amount and location of the production of those commodities and finished goods, increased inspection procedures and more restrictive import and export controls, changes in our operating expenses, including bunker prices, dry-docking and insurance costs, performance of our charterers and other counterparties with whom we deal, timely delivery of vessels under construction within the contracted price, 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