Business Context and Reporting Period
This Form 6-K filing by Ship Finance International Limited (SFL) covers the month of September 2018, referencing a press release dated August 22, 2018. The Company, a Bermuda-based foreign private issuer, operates a fleet of over 80 vessels including tankers, bulkers, container vessels, and offshore assets. The filing announces a strategic acquisition to expand its container vessel portfolio.
Key Financial Metrics and Transaction Details
- Acquisition: Agreed to acquire three modern 10,600 TEU container vessels built in 2015.
- Charter Backlog: Fixed rate charter backlog will increase by approximately $260 million, potentially reaching $430 million if extension options are exercised.
- Estimated EBITDA: The vessels are projected to contribute approximately $35.5 million per year.
- Financing Structure: The Company received an offer for $200 million in intermediary bank financing. The remaining balance will be funded by cash on hand, with plans to arrange long-term financing in due course.
- Charter Terms: Minimum 6-year time charters with options to extend up to 10 years, including a purchase option with profit split at the end of the initial period.
Material Changes and Growth
The acquisition represents a significant expansion of the Company's asset base and charter backlog. Management noted that over the preceding five months, the Company added more than $800 million to its charter backlog. This transaction reinforces the Company's strategy of executing repeat transactions with leading liner companies.
Guidance, Outlook, and Risks
Management Commentary: CEO Ole B. Hjertaker emphasized the Company's financial flexibility and ability to execute swiftly on new transactions, expecting continued growth in the fleet and charter backlog throughout 2018.
Risks and Contingencies: The filing includes standard forward-looking statement disclaimers. Key risks cited include fluctuations in charter hire rates and vessel values, changes in global economic conditions, bunker prices, dry-docking and insurance costs, regulatory changes, and potential disruptions to shipping routes due to political events or accidents.
Investor Verification Checklist
- Verify the final purchase price of the three vessels, as the filing states it is confidential.
- Confirm the identity of the "leading container line" acting as the charterer.
- Monitor the execution of the long-term financing arrangement to replace the intermediary bank financing.
- Track the actual delivery dates of the vessels to ensure they align with the "near term" expectation.
- Review subsequent filings for updates on the $800 million backlog growth mentioned for the prior five-month period.