SEC Filing Summary: Ship Finance International Limited (SFL Corp Ltd.)
Business Context and Reporting Period
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Company: Ship Finance International Limited (SFL Corp Ltd.)
Reporting Period: February 2013 (Filing Date: February 28, 2013)
Transaction Date: January 25, 2013 (Agreement Execution); January 30, 2013 (Closing Date)
Business Overview: The Company is a Bermudian exempted company engaged in the ownership and operation of a fleet of vessels. This filing discloses the execution of underwriting agreements and a supplemental indenture related to a significant capital raising transaction.
Key Financial Metrics and Transaction Details
This filing does not contain audited financial statements, revenue, or profit metrics for a specific reporting period. Instead, it details the terms of a new debt and equity-related transaction:
- Convertible Senior Notes: Issuance of up to $350,000,000 aggregate principal amount of 3.25% Convertible Senior Notes due 2018.
- Interest Rate: 3.25% per annum, payable quarterly in arrears.
- Conversion Price: Initial conversion price of $21.9450 per share of Common Stock.
- Share Lending Facility: Concurrent loan of up to 6,060,606 shares of Common Stock to Deutsche Bank AG, London Branch (the "Borrower") to facilitate the sale of the Notes.
- Structuring Fee: The Company agreed to pay a structuring fee of $2,000,000 to the Underwriter, to be netted from the proceeds of the Notes.
- Use of Proceeds: The filing text does not specify the exact allocation of proceeds beyond general corporate purposes and the payment of transaction expenses.
Material Changes and Transaction Structure
The primary material change disclosed is the expansion of the Company's capital structure through the issuance of convertible debt and the establishment of a share lending facility.
- Debt Issuance: The Company entered into an underwriting agreement with Deutsche Bank Securities Inc. and ABG Sundal Collier Inc. to sell the Notes. The Notes are convertible into cash, shares of Common Stock, or a combination thereof at the Company's option.
- Share Loan: To support the offering, the Company's wholly-owned subsidiary, SFL Capital II Ltd., entered into a Share Lending Agreement to loan shares to the Borrower. These shares were borrowed by the subsidiary from Hemen Holding Ltd. prior to the loan to the Borrower.
- Indenture: A First Supplemental Indenture was executed with U.S. Bank National Association as Trustee, establishing the terms of the Notes, including conversion mechanics, covenants, and events of default.
Guidance, Outlook, and Risks
Management Commentary: The filing contains no forward-looking guidance, earnings outlook, or management discussion and analysis regarding future financial performance. The document is strictly a disclosure of the transaction agreements.
Risks and Contingencies:
- Conversion Risk: The Notes are convertible, which may lead to dilution of existing shareholders. The Company has the option to settle conversions in cash, stock, or a combination.
- Change of Control: In the event of a Change of Control Event (defined as any person or group other than the Fredriksen family becoming the owner of more than 50% of voting power), holders have the right to require the Company to repurchase the Notes at 100% of principal plus accrued interest.
- Lock-up Restrictions: The Company agreed to a 90-day lock-up period restricting the sale of Common Stock or securities convertible into Common Stock, subject to specific exceptions.
- Regulatory Compliance: The transaction is subject to the accuracy of representations regarding the Company's compliance with laws, including environmental laws and maritime regulations, and the absence of material adverse changes.
Key Facts for Investor Verification
- Debt Load: Verify the impact of the new $350 million debt obligation on the Company's leverage ratios and interest coverage.
- Dilution Potential: Assess the potential dilution from the conversion of the Notes at the initial price of $21.9450 and the 6,060,606 shares made available via the share lending facility.
- Share Ownership: Confirm the beneficial ownership structure, particularly regarding the Fredriksen family's control and the definition of a "Change of Control Event."
- Settlement Terms: Review the specific mechanics of the "Combination Settlement" option, which allows the Company to limit cash outflows during conversion by issuing a mix of cash and stock.
- Financial Health: As this filing does not contain financial statements, investors must refer to the Company's most recent Form 20-F or 10-K to verify liquidity, cash flow, and existing debt levels prior to this transaction.