Business Context and Reporting Period
This Form 6-K filing by Ship Finance International Limited (SFL Corp Ltd.) covers the month of March 2018, specifically referencing a press release dated March 14, 2018. The Company is a Bermuda-based foreign private issuer operating in the maritime sector with a fleet of approximately 70 vessels across tankers, bulkers, container vessels, and offshore assets.
Key Financial Metrics and Transactions
- Acquisition: Agreed to acquire 15 feeder size container vessels (1,100 to 4,400 TEU) with long-term bareboat charters to a leading container line.
- Acquisition Price: Confidential; stated to be close to the recycling value of the vessels.
- Projected EBITDA: The acquired fleet is estimated to contribute approximately $20 million per year in aggregate EBITDA.
- Charter Terms: Seven-year charter term from delivery with subsequent purchase obligations by the charterer.
- Asset Sale: Agreed to sell the 1,700 TEU container vessel SFL Avon to an unrelated third party.
- Sale Proceeds: Net sales proceeds are expected to be approximately $12.5 million.
- Expected Gain: Management anticipates a minor book gain on the sale of the SFL Avon.
Material Changes and Strategic Shifts
The filing highlights a strategic shift in the Company's container vessel portfolio. The Company is exiting the short-term charter market for container vessels by selling the SFL Avon, which was its only vessel in that segment. Concurrently, it is expanding its long-term charter backlog by acquiring 15 vintage vessels. Management cites a recent upswing in sector values as a catalyst for the sale and notes increasing opportunities to deploy capital in 2018.
Guidance, Outlook, and Risks
Management Commentary: CEO Ole B. Hjertaker described the acquisition as offering attractive cash flow from a strong counterpart with limited downside risk. The Company remains focused on growing its fleet and charter backlog.
Forward-Looking Risks: The filing includes standard cautionary statements regarding uncertainties that could cause actual results to differ from expectations. Key risks include:
- Strength of world economies and currencies.
- Fluctuations in charter hire rates and vessel values.
- Changes in demand due to OPEC production levels and oil consumption.
- Operating expense volatility (bunker prices, dry-docking, insurance).
- Regulatory changes and potential litigation liabilities.
- Political conditions and disruption of shipping routes.
Investor Verification Checklist
- Verify the exact purchase price of the 15-vessel fleet, as it is currently confidential.
- Confirm the identity of the "leading container line" acting as the charterer.
- Monitor the delivery schedule for both the acquired fleet and the sold vessel, both expected in April 2018.
- Review future filings for the actual book gain realized on the sale of the SFL Avon.
- Assess the impact of the $20 million estimated EBITDA contribution on the Company's overall dividend capacity.