Ship Finance plans $1.4 billion loan for purchase of rigs

By Sara Rosenberg

New York, Sept. 16 - Ship Finance International Ltd. received a commitment for a $1.4 billion loan to help fund its acquisition of two newbuilding ultra-deepwater semi-submersible drilling rigs from Seadrill Ltd., according to a news release.

The loan commitment came from a syndicate of international banks.

Ship Finance said that the loan will be paid down to about $730 million over the five-year term. The average annual repayment of debt will be about $134 million per year.

The company has only partly guaranteed the new loan facility, and of the $1.4 billion loan, its guarantee exposure is limited to $100 million per rig.

Under the agreement, Ship Finance is paying about $1.7 billion for the West Hercules rig, which is expected to be acquired in combination with a 15-year charter back in early October, and the West Taurus rig, which is expected to be acquired in combination with a 15-year charter back immediately after it's delivered to Seadrill in December.

The about $300 million net investment by Ship Finance for the acquisition will come from a combination of available liquidity and new financing arrangements related to existing assets.

Ship Finance is a Hamilton, Bermuda-based ship owning company.

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