Ship Finance International Announces Termination Of Charters For Five Container Vessels
Ship Finance International Limited (NYSE: SFL) today announced that it has agreed to terminate chartering agreements with Horizon Lines, LLC ("Horizon Lines") relating to five of its vessels. Ship Finance will receive as termination compensation $40 million in second lien notes issued by Horizon Lines and warrants exercisable into ten percent of the common stock of Horizon Lines, Inc. as part of the restructuring outlined below.
The 2,824teu vessels were built in Korea in 2006 and 2007, and have been chartered to Horizon Lines for an average of approximately 5 years. The original bareboat charter term was for 12 years, but following the termination of the Horizon Lines charters, Ship Finance will employ the vessels in the time-charter market instead. The break-even rate per day per vessel (after interest, debt amortization and estimated operating expenses) will be approximately $10,500 for the first 18 months and thereafter approximately $14,500 per day for the next 66 months.
The issuance of the $40 million of notes is part of a comprehensive restructuring of Horizon Lines. The notes will be part of a total of approximately $140 million of second lien notes, and junior to approximately $225 million of first lien notes. The notes will mature in October 2016 and interest is payable semi-annually, first time in October 2012. The annual interest rate will be 13% if paid in cash, 14% if paid 50/50 in cash and newly issued bonds and 15% if paid in newly issued bonds only.
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