SFL announces acquisition of 2020-built VLCC with long term charter
SFL Corporation Ltd. has agreed to acquire a newbuild 308,000 dwt crude oil carrier, or “VLCC”, in combination with a 7-year bareboat charter, adding nearly $60 million to SFL’s fixed rate charter backlog, the company said in its release.
The vessel is expected to be delivered from the shipyard in China in the second quarter, and will have full cash flow effect in Q3 2020. The net purchase price will be $65 million, which is significantly below current broker estimates for VLCC resales, effectively providing SFL with a very attractive risk profile.
SFL’s chartering counterparty, an affiliate of the Landbridge Group, has secured a 3-year sub charter to an oil major, providing good cash flow visibility. There will be purchase options for the charterer during the charter period, first time after three years, and at the end of the charter there is a purchase obligation.
SFL will fund the acquisition with a $50 million non recourse bank debt facility at very attractive terms, and net cash flow after debt service during the first three years is estimated to more than $4 million per year on average.
SFL has a unique track record in the maritime industry and has paid dividends every quarter since 2004. The Company’s fleet of more than 80 vessels is split between tankers, bulkers, container vessels and offshore drilling rigs. SFL’s long term distribution capacity is supported by a portfolio of long term charters and significant growth in the asset base over time.