Business Context and Reporting Period
This Form 6-K filing by Ship Finance International Limited (SFL Corp Ltd.) covers the month of March 2007. The report primarily discloses a material corporate transaction announced via a press release dated February 6, 2007, regarding the acquisition of two newbuilding Capesize dry bulk vessels.
Key Financial Metrics and Transaction Details
- Acquisition Cost: Total delivered price of $160 million ($80 million per vessel).
- Financing Structure: The Company expects to finance approximately 75% of the purchase price through a bank loan.
- Charter Rates (Bareboat to Golden Ocean):
- Years 1-5: $27,450 per day per vessel.
- Years 6-10: $22,600 per day per vessel.
- Years 11-15: $19,750 per day per vessel.
- Sub-Charter Economics: Golden Ocean has secured sub-charters yielding a net time charter rate of approximately $36,800 per day per vessel for the first 5 years.
- Operating Costs: As bareboat charters, the Charterer (Golden Ocean) is responsible for all operating and maintenance costs.
- Asset Specifications: Two vessels, each with a cargo capacity of approximately 170,000 dwt, to be constructed by Daehan Shipbuilding Co. Ltd.
Material Changes and Fleet Composition
The acquisition represents a strategic diversification of the asset base and customer portfolio. Upon delivery, the Company will hold 11 vessels on long-term charters in the dry bulk market (including one acquired in 2006 and 8 OBO vessels configured for dry bulk). The total fleet, including newbuildings and adjusted for recent sales, is projected to consist of 57 vessels, essentially all on medium to long-term charters.
Outlook, Risks, and Contingencies
- Delivery Schedule: Vessel delivery is scheduled for the fourth quarter of 2008 and the first quarter of 2009.
- Financing Contingency: Charter rates are subject to adjustment if there are material differences between actual bank financing terms and the financing assumptions agreed upon with Golden Ocean.
- Liability Structure: The purchase and financing will be held in subsidiaries with only limited guarantee obligations from the parent company, Ship Finance.
- Purchase Options: Golden Ocean holds fixed price purchase options for each vessel after 5, 10, and 15 years at $61 million, $44 million, and $24 million, respectively.
Investor Verification Checklist
- Verify the final execution of the 75% bank loan financing and confirm if any rate adjustments were triggered by financing terms.
- Confirm the actual delivery dates of the vessels in 4Q 2008 and 1Q 2009.
- Monitor the status of Golden Ocean's sub-charters to ensure the $36,800 per day net rate is maintained.
- Review subsequent filings for updates on the total fleet count of 57 vessels and any further sales or acquisitions.