Ship Finance ends third quarter with $1.9 billion of consolidated net interest-bearing debt

By Jennifer Lanning Drey

Savannah, Ga., Nov. 23 - Ship Finance International Ltd. had $1.9 billion of consolidated net interest-bearing debt at the Sept. 30 close of the third quarter, Ole Hjertaker, its chief financial officer, reported Tuesday during its quarterly earnings conference call.

The company had $66.8 million of available cash at quarter-end.

Looking at its newbuilding schedule, Ship Finance has gross remaining capital commitments of $293 million, including transactions announced subsequent to the end of the third quarter, Hjertaker said.

"Compared to our overall asset base, this is a very moderate number," the CEO said.

As of Sept. 30, payments and acquisitions related to newbuildings and acquisitions totaled $91 million.

Thus far, the company has funded all payments from its cash position, but Hjertaker said it expects to secure financing in due course for its remaining commitments.

Following the close of the third quarter, the company completed an $84.6 million offering of senior unsecured notes due 2014 in the Norwegian credit market.

Additionally, in November, Ship Finance secured bank financing for two of five recently announced Supramax bulk carrier acquisitions. The new loan will be for $54 million, or 80% of the purchase price of the vessels. Ship Finance will only provide corporate guarantees for a limited part of the outstanding loan amount.

Suspended offering

Also in November, Ship Finance announced a potential offering of $400 million of senior unsecured notes due 2020. However, the offer was later suspended due to weakening conditions in the debt capital markets.

"Unfortunately, we launched the deal into a market that suddenly changed and last week had the biggest outflow of capital from the high-yield funds since early 2009. This is not a market setting to issue new capital in unless you are desperate as we see it," Hjertaker said.

The CEO said the company was looking to opportunistically refinance its 8½% senior notes early but is in no rush to do so.

There is more than three years remaining until the existing senior notes are due, and the company currently has the option to call the senior notes on a 30-day notice at 101.417%, reducing to 100% in December 2011 and thereafter, he noted.

Ship Finance reported total operating revenues on a consolidated basis of $73.5 million in the third quarter. The figure compared to total operating revenues of $80.2 million in the same period of 2009.

Reported net operating income for the third quarter was $44.2 million, down from $46.1 million in the same period of 2009.

Ship Finance is a Hamilton, Bermuda-based oil tanker operator.

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