Ship Finance Closes $280Mn Deal With Horizon Lines

by Amanda Banks, Tax-News.com, London

20 April 2006

Bermuda-based Ship Finance International Limited has announced that it has closed the definitive agreements and related financing documents to acquire five newbuilding container vessels from third parties for a sum of approximately $280 million, and to place the vessels on long-term charters to Horizon Lines, LLC, a subsidiary of Horizon Lines Inc.

The five sister vessels are being built at Hyundai Mipo in Korea and are scheduled to be delivered over the course of a five-month period to wholly-owned subsidiaries of Ship Finance, commencing at the beginning of 2007. The vessels have a carrying capacity of 2,824 TEUs and are capable of a service speed of 23 knots.

The term of each bareboat charter will be 12 years with a 3-year renewal option on the part of Horizon Lines which will operate the vessels in its TP1 service from the US West Coast to Guam and Asia. The vessels will fly the United States flag.

Horizon Lines will have options to buy the vessels after 5, 8, 12 and 15 years.

"We are very pleased with this transaction. It expands our business in an interesting segment of shipping," commented Tor Olav Troim, SFL's Chairman.

"It provides growth for our company and diversifies our fleet risk as well as the client portfolio. The project is financed with approximately 75% non recourse debt, and it gives our shareholders a very solid return on the equity invested," he added.

"We are delighted to work with Horizon Lines, a true market leader, as they expand their presence in the Pacific market and dynamically position themselves for further growth," Troim concluded.

Horizon Lines, LLC operates 16 US-flag vessels on routes linking the continental United States with Alaska, Hawaii, Guam, and Puerto Rico. Horizon Lines also owns Horizon Services Group, an organization with a diversified offering of cargo management and tracking services being marketed to shippers, carriers, and other supply chain participants.

Chuck Raymond, President and CEO of Horizon Lines noted that: “The addition of these five new vessels commences our long-term vessel replacement strategy in a very cost effective and capital efficient manner."

"This transaction will benefit our customers, partners and shareholders, while reducing the age of our operated fleet to one of the lowest in the markets we serve," Raymond added.

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