SHIP FINANCE BUYS BOX BOATS

[proud_ionian]

JOHN Fredriksen-controlled company Ship Finance International, which was set up to own tankers owned by Frontline, has bought two 1,700 TEU containership newbuildings for US$49.25m each. The vessels are for delivery by Wenchong Shipyard in China in May and November this year.

Ship Finance's Chairman, Tor Olav Troim, says: "This transaction is an important milestone for Ship Finance in its strategy to become a leading global ship financier. It will be the first vessel owned by Ship Finance, which will be on charter to a non-Frontline affiliated party. It will also be Ship Finance's first investment outside the tanker segment. The container market offers great opportunities for our Company. It is a market with strong growth where medium to long term charters are in high demand by major operators. The initial four year charter period will write down a 20 - 25 year life span asset to approximately 50% of cost. This limits the financial risk for Ship Finance."

The company says that the first ship has already been chartered out to the Korean containership operator Heung A for a period of four years from delivery at a rate of approximately US$ 28,000 per day. It says it also intends to charter out the second vessel on a medium term charter noting: “Several interesting offers have been received and are under consideration.” A statement says: “The purchase price includes 1.50 % commission payable to Seatankers, an affiliate of the Company's main shareholder Hemen Holding Ltd. This commission relates to arranging the vessel acquisitions and the charter.” According to Ship Finance the transaction, which will be funded by a combination of bank loans and internal liquidity, will increase cash flow as well as earnings per share and is expected to build significant value for our shareholders.

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