May 19, 2008
Seadrill and Ship Finance in $850 million drillship sale and leaseback (2)
In a separate statement, Ship Finance International Limited (NYSE: SFL) said that with a total acquisition cost of approximately $850 million, the deal is a record-breaking sale/leaseback transaction in the maritime industry. Ship Finance says it has received commitments for a $700 million loan facility from a syndicate of leading international banks, and the remaining $150 million will be funded from its available liquidity.
The $700 million loan facility will have a 5 year term and the average annual repayment of debt will be approximately $65 million per year in this period. The average annual net cash contribution, after estimated interest expense and debt repayment, will be approximately $23 million, or $0.32 per share.
Based on this highly accretive transaction, the Company intends to increase the quarterly dividend by two cents per share in the third quarter, when the new drillship is delivered and has commenced its operation.
Lars Solbakken, CEO, Ship Finance Management AS, said in a comment: "We are very pleased to announce our first acquisition of an ultra-deepwater drillship. Seadrill is among the world's leading offshore drilling contractors with a market capitalization in excess of USD 13.5 billion. They have a fleet of state-of-the-art ultra-deepwater drilling units and an impressive fixed contract backlog, currently in excess of $12 billion. Furthermore, this investment in the oil exploration sector confirms our strategy to continue diversifying the asset base and grow our long-term charter business."
He said that the "strong fundamentals of the offshore industry combined with long term charter coverage and high quality credit counterparts makes this a very attractive industry for us to invest in. We see a large potential in providing further flexible solutions to Seadrill as well as assisting other major offshore companies to optimize their capital structure and create flexibility for further growth. Over the last 12 months, Ship Finance has announced new investments of approximately $1.5 billion, and our fixed-rate charter backlog, excluding profit share, is currently in excess of $6.6 billion."