SFL Acquires Eight Capesize Bulkers

 

Ship Finance International Limited today announced the agreement to acquire eight Capesize dry-bulk carriers from subsidiaries of Golden Ocean Group Limited ("Golden Ocean").

The vessels are named Golden Beijing, Golden Zhoushan, Golden Magnum, Battersea, Belgravia, Golden Zheijang, Golden Future and KSL China and were built in Korea and China between 2009 and 2013. The total acquisition price will be $272 million, or $34 million on average per vessel. The vessels are expected to be delivered to Ship Finance within July 2015, subject to customary closing conditions.

The vessels will be chartered on a time-charter basis to a subsidiary of Golden Ocean for a period of 10 years. The daily base charter rate will be $17,600 during the first seven years, and $14,900 thereafter. In addition, there will be a 33% profit share for revenues above the base rate, calculated and paid on a quarterly basis.

Our charter backlog will increase by nearly $500 million and aggregate annual EBITDA contribution from the vessels, excluding profit share, is estimated to more than $30 million on average during the first seven years of the charter. Golden Ocean will have a purchase option after year 10, and if such option is not exercised, Ship Finance will have the option to extend the charters by three years.

The Company is in the process of arranging bank financing for the transaction, and we expect a financing amount of approximately $22 million per vessel, or approximately $176 million in total. Similar to most of our other financing arrangements, we expect to provide only a limited corporate guarantee for the financing.

Golden Ocean is a leading international dry-bulk shipping company, mainly operating in the Capesize and Panamax market segments. Golden Ocean is listed in New York and Oslo with the ticker "GOGL", and has a market capitalization of approximately $1 billion.

Ole B. Hjertaker, CEO of Ship Finance Management AS, said in a comment: "We are pleased to announce an acquisition of vessels in combination with long-term charters to a leading company in the dry-bulk market. We believe the entry point is attractive and there could be significant additional value in the profit sharing agreement over time. Our charter backlog and long-term distribution capacity is building in an accretive manner, and there is still good capacity for more investments without raising additional equity capital."