SFL - Acquisition of modern Suezmax tankers and long term charters

Rhea-AI Summary

SFL Corporation Ltd. (NYSE: SFL) has announced the acquisition of three Suezmax tankers with long-term charters to a leading commodity trading company. The 2019-built vessels feature modern eco-designs, including exhaust gas cleaning systems, and are expected to be delivered in Q4. This transaction will enhance SFL's backlog by approximately $140 million over a minimum five-year charter period, with potential profit-sharing on future vessel sales. CEO Ole B. Hjertaker highlighted the strategic nature of this acquisition amidst a soft tanker market, aiming for sustained growth.

Positive

• Acquisition of three Suezmax tankers expected to add approximately $140 million to fixed-rate backlog.
• Long-term charters of minimum five years with extension options enhance revenue stability.
• The eco-design of vessels aligns with environmental regulations, potentially appealing to future charterers.

Negative

• Current spot tanker market is soft, indicating potential volatility in future earnings.
• Dependence on a single charterer for revenue could pose a risk to financial stability.

SFL Corporation Ltd. (NYSE: SFL) (“SFL” or the “Company”) announced today that it has agreed to acquire three Suezmax tankers in combination with long term time charters to a world-leading commodity trading and logistics company.

The vessels are built in 2019 and have the latest eco-design features, including exhaust gas cleaning systems. The Company expects to take delivery of the vessels in the fourth quarter.

The charter period of the vessels will be for minimum five years with extension options thereafter, adding approximately $140 million to SFL’s fixed-rate backlog. The charterer will also have the option to develop a sale of the vessels during the charter period, subject to a profit share mechanism with SFL.

Ole B. Hjertaker, CEO of SFL Management AS, said in a comment: “This acquisition demonstrates our ability to achieve sustained growth through new transactions with strong counterparties in multiple shipping segments. The spot tanker market is soft currently, and asset values have not moved like several other shipping segments. From a counter-cyclical perspective, we therefore believe this could be an attractive entry point in combined with long-term charters. We have this year added more than $850 million to our charter backlog and will continue to explore new opportunities going forward”.

September 7, 2021

The Board of Directors
SFL Corporation Ltd.
Hamilton, Bermuda

Investor and Analyst Contacts:
Aksel Olesen, Chief Financial Officer, SFL Management AS
+47 23 11 40 36
André Reppen, Chief Treasurer & Senior Vice President, SFL Management AS
+47 23 11 40 55

Media Contact:
Ole B. Hjertaker, Chief Executive Officer, SFL Management AS
+47 23 11 40 11

About SFL

SFL has a unique track record in the maritime industry and has paid dividends every quarter since its initial listing on the New York Stock Exchange in 2004. The Company’s fleet of vessels is split between container vessels, bulkers, tankers 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. More information can be found on the Company's website: www.sflcorp.com

Cautionary Statement Regarding Forward Looking Statements

This press release may contain forward looking statements. These statements are based upon various assumptions, many of which are based, in turn, upon further assumptions, including SFL management’s examination of historical operating trends, data contained in the Company’s records and other data available from third parties. Although SFL believes that these assumptions were reasonable when made, because assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond its control, SFL cannot give assurance that it will achieve or accomplish these expectations, beliefs or intentions.

Important factors that, in the Company’s view, could cause actual results to differ materially from those discussed in the forward looking statements include the strength of world economies, fluctuations in currencies and interest rates, general market conditions in the seaborne transportation industry, which is cyclical and volatile, including fluctuations in charter hire rates and vessel values, changes in demand in the markets in which the Company operates, including shifts in consumer demand from oil towards other energy sources or changes to trade patterns for refined oil products, changes in market demand in countries which import commodities and finished goods and changes in the amount and location of the production of those commodities and finished goods, technological innovation in the sectors in which we operate and quality and efficiency requirements from customers, increased inspection procedures and more restrictive import and export controls, changes in the Company’s operating expenses, including bunker prices, dry-docking and insurance costs, performance of the Company’s charterers and other counterparties with whom the Company deals, the impact of any restructuring of the counterparties with whom the Company deals, including the bankruptcy proceedings relating to Seadrill and certain of its subsidiaries and timely delivery of vessels under construction within the contracted price, governmental laws and regulations, including environmental regulations, that add to our costs or the costs of our customers, potential liability from pending or future litigation, potential disruption of shipping routes due to accidents, political instability, terrorist attacks, piracy or international hostilities, the length and severity of the ongoing coronavirus outbreak and governmental responses thereto and the impact on the demand for commercial seaborne transportation and the condition of the financial markets, and other important factors described from time to time in the reports filed by the Company with the United States Securities and Exchange Commission. SFL disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 

FAQ

What is the significance of SFL's acquisition of three Suezmax tankers?

The acquisition is expected to add approximately $140 million to SFL's fixed-rate backlog and secure long-term charters, enhancing revenue stability.

When is SFL expected to take delivery of the acquired tankers?

SFL expects to take delivery of the vessels in the fourth quarter.

How long are the charters for the new Suezmax tankers?

The charters are for a minimum of five years, with options for extensions.

What are the eco-design features of the newly acquired vessels?

The vessels include modern eco-design features such as exhaust gas cleaning systems, aligning with environmental regulations.

What could affect SFL's financial stability after this acquisition?

The soft spot tanker market and reliance on a single charterer for revenue could pose risks to SFL's financial stability.