1. SFL sells two Suezmax tankers to Koch for $57 million each. 2. Net proceeds of approximately $26 million per vessel will be realized. 3. SFL expects a $23 million book gain from this transaction. 4. Proceeds will fund investment in fuel-efficient vessels for the charter market. 5. Solid cash flows and strong charter rates support SFL's growth strategy.
FAQ
Why Bullish?
The sale of older vessels at a considerable gain and subsequent reinvestment into modern ships indicate financial health. Historical precedents show similar strategic sales positively impacted stock prices as investor confidence increases.
How important is it?
The announcement directly pertains to SFL's financial maneuvers and future asset base, which are crucial for investor sentiment. Solidify existing positive trends while signaling potential for future growth.
Why Short Term?
Immediate gains from vessel sales and reinvestments are likely to influence market perception quickly. Short-term investor reactions to the sale and future charter engagements will shape SFL's stock movement.
SFL Corporation Announces Sale of Suezmax Tankers and Charter Termination
SFL Corporation Ltd. (NYSE: SFL) has made headlines today with its announcement regarding the sale of two 2015-built Suezmax tankers. These vessels, currently leased to a subsidiary of Koch Industries, Inc., are expected to fetch a gross sales price of approximately $57 million each. After accounting for debt repayment and a negotiated termination fee, net proceeds per vessel are projected to be around $26 million.
Details of the Transaction
The sale of these Suezmax tankers will result in deliveries occurring in the fourth and first quarters, respectively. Notably, SFL anticipates realizing a total book gain of about $23 million from this transaction, which will be shared between the two sold vessels. In conjunction with this sale, SFL has opted to terminate the charters of two additional 2020-built Suezmax tankers with Koch, incurring a termination fee as previously arranged in their profit-sharing agreement.
Future Plans for the Fleet
With the sale completed, SFL will retain two eco-designed vessels, built in Korea and equipped with scrubbers. Initially, these vessels will operate in the spot market, with the potential for securing long-term contracts as market conditions evolve. SFL is confident that these younger, fuel-efficient vessels are well-positioned to capitalize on the currently robust charter market, where charter rates have significantly exceeded existing fixed rates.
CEO Comments on the Deal
Ole B. Hjertaker, Chief Executive Officer of SFL Management AS, emphasized the strategic importance of this transaction, stating: “This transaction illustrates the embedded value in our fleet, where we can materialize a significant profit from the sale of two 10-year-old vessels just three years after their acquisition. In the meantime, we have enjoyed solid cash flows from the vessels.” He added that a portion of the proceeds will be reinvested in more efficient assets to maximize returns.
About SFL Corporation
Established as a leader in the maritime sector, SFL Corporation has maintained a consistent dividend payout every quarter since its debut on the New York Stock Exchange in 2004. With a diverse fleet including tankers, bulkers, container vessels, car carriers, and offshore drilling rigs, SFL's distribution capacity is supported by long-term charters and an expanding asset base. For more information on SFL Corporation, visit www.sflcorp.com.
Cautionary Note
This press release contains forward-looking statements based on various assumptions, including ongoing market conditions and operational trends. While SFL believes these assumptions to be reasonable, uncertainties and market volatility could cause actual results to differ significantly. Factors such as global economic strength, currency and interest rate fluctuations, and changing demand in the maritime transportation industry could all influence outcomes.
Contact Information
- Espen Nilsen Gjøsund, Vice President - Investor Relations: +47 47500500
- André Reppen, Chief Treasurer & Senior Vice President: +47 23114055
- Aksel Olesen, Chief Financial Officer: +47 23114036
- Ole B. Hjertaker, Chief Executive Officer, SFL Management AS: +47 23114011