Ship Finance ended Q2 with $279 million of liquidity, including $249 million cash, repaid Oct. NOK notes

By Paul Deckelman

New York, Aug. 30 – Ship Finance International Ltd. ended the 2017 second quarter with what its chief financial officer feels is a solid liquidity position, including ample cash and no immediate capital spending requirements for the year.

CFO Harald Gurvin told analysts on a Wednesday conference call following the release of the Hamilton, Bermuda-based tanker, bulk carrier, containership and energy drilling rig company’s numbers for the quarter ended June 30 that “we have a strong liquidity position, with $279 million of available liquidity at the end of the quarter, in addition to $111 in marketable securities, and no remaining capex following the delivery of two product tankers in August.”

Gurvin said that the balance sheet at quarter end showed $249 million of consolidated cash at the end of the quarter, excluding amounts freely available for drawdown under revolving credit facilities.

That was well up from the $61.5 million of cash and equivalents available at the end of the first quarter on March 31 and the $62.38 million on the balance sheet at the end of fiscal 2016 on Dec. 31 of that year.

He explained that “the strong cash position is due to drawings on the revolving credit facilities during the quarter.”

Besides that cash, the company had another $9 million of restricted cash, held as collateral for a short-term guarantee.

Gurvin said the company had around $29 million of borrowing availability under its credit facilities, bringing total liquidity of just under $280 million, not counting the $111 of available-for-sale securities.

He said the latter figure includes investment in senior secured bonds and other securities, with a fair value of $48 million at the quarter end, and also its 11 million shares of Front Line Ltd., which charters a number of tankers from Ship Finance and which granted it an ownership stake in 2015. Gurvin said the Front Line shares have a market value of $62 million, based on the closing share price on Tuesday.

As of the quarter end, Ship Finance’s balance sheet showed $1.184 billion of long-term debt, plus another nearly $488 million of short-term debt and current portion of that long-term debt.

The CFO said the current portion of long-term debt includes the remaining $184 million outstanding under what formerly was $350 million of 3.25% convertible notes due in February 2018, “which includes a share settlement option at maturity.”

In June, the company issued NOK 500 million in senior unsecured bonds in the Scandinavian market, equivalent to approximately $60 million. The three-year bonds have a coupon of NIBOR plus 4.75%, and all payments have been swapped to U.S. dollars at a fixed rate of 6.9%.

Gurvin said the proceeds of the bonds were used to partly finance the NOK 600 million bonds that were to have come due this October.

He said the remaining outstanding NOK issue “was settled post-quarter end, following the exercise of a call option by the company.”

And he said the company also secured $76 million of bank financing “at attractive terms” for the two newbuild product tankers, which were both delivered this month.

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