(By Balaseshan) Ship Finance International Ltd. (NYSE: SFL) said it has agreed to buy two car carriers at attractive prices in combination with five-year charters.
The Japan-built vessels have a capacity of about 6,500 car equivalent units (CEU) and were built in 2005 and 2006, respectively. The vessels will be time chartered to an investment grade logistics company, publicly listed in Asia.
The charter period will be five years, adding about $85 million to the company's charter backlog. Expected delivery of the vessels will be in October and November 2012.
The funding of the vessels will be a combination of equity and loans, and Ship Finance has already received indications for 70% financing of the purchase price at favorable terms.
The aggregate net cash flow after estimated operating expenses, interests and loan amortization is projected to be about $4.8 million in aggregate per year, or about 20% annual return on invested equity during the charter period.
"We are very pleased to expand our long-standing relationship with one of the premier logistics companies in Asia. The purchase price is very attractive compared to replacement cost for similar high specification assets, and there will be an immediate positive cash flow effect for the company already in the fourth quarter," said Ole Hjertaker, Chief Executive of Ship Finance Management AS.
Including newbuildings, the company has a fleet of 68 vessels, including 25 crude oil tankers (VLCC and Suezmax), two chemical tankers, three oil/bulk/ore vessels, 11 drybulk carriers including two newbuildings, 15 container vessels including four newbuildings, six offshore supply vessels, one jack-up drilling rig, one ultra-deepwater drillship, two ultra-deepwater semi-submersible drilling rigs and two car carriers.
SFL closed Tuesday's regular session up 0.26% at $15.48. The stock has been trading between $8.62 and $17.94 for the past 52 weeks.