History

We were formed in 2003 as a wholly owned subsidiary of Frontline, which is one of the largest owners and operators of large crude oil tankers in the world. On May 28 2004 Frontline announced the distribution of 25% of our common shares to its ordinary shareholders in a partial spin off, and our common shares commenced trading on the NYSE under the ticker symbol “SFL” on June 17 2004. Frontline subsequently made six further dividends of our shares to its shareholders and its ownership in our Company is now less than one per-cent.

Pursuant to an agreement entered into in December 2003, we purchased from Frontline, effective January 2004, a fleet of 47 vessels, comprising 23 Very Large Crude Carriers, or VLCCs, including an option to acquire one VLCC, 16 Suezmax tankers and eight OBOs.

Since January 1 2005 we have diversified our asset base from the initial two asset types - crude oil tankers and OBOs - to eight asset types, now including container vessels, drybulk carriers, chemical tankers, jack-up drilling rigs, ultra-deepwater drilling units and offshore supply vessels.

Since 2006 we have reduced our non-double hull tanker fleet from 18 vessels to seven vessels, including the single-hull VLCC Golden River, which we have sold with delivery to its new owner expected in April 2010, and the VLCC Front Sabang, which we have sold on hire-purchase terms scheduled to expire in October 2011.

Most of our oil tankers and OBOs are chartered to the Frontline Charterers under longer term time charters that have remaining terms that range from three to 17 years. The Frontline Charterers, in turn, charter our vessels to third parties. The daily base charter rates payable to us under the charters have been fixed in advance and will decrease as our vessels age, and the Frontline Charterers have the option to terminate the charter for non-double hull vessels from 2010. The Frontline Charterers have established restricted cash deposits, which currently total $89 million, held by them as security against their charter commitments. In addition, Frontline guarantees the payment of charter hire with respect to Frontline Shipping and Frontline Shipping II.

We have entered into charter ancillary agreements with the Frontline Charterers, our vessel-owning subsidiaries and Frontline, which remain in effect until the last long term charter with the relevant Frontline Charterer terminates in accordance with its terms. Frontline has guaranteed the Frontline Charterers’ obligations under the charter ancillary agreements. Under the terms of the charter ancillary agreements, the Frontline Charterers have agreed to pay us a profit sharing payment equal to 20% of the charter revenues they realize above specified threshold levels, paid annually and calculated on an average daily TCE basis. After the relevant anniversary dates in 2010, all of our non-double hull vessels will be excluded from the annual profit sharing payment calculation, and the time charter received from Frontline will reduce to $7,500 per day.

We have also entered into agreements with Frontline Management to provide fixed rate operation and maintenance services for the vessels on time charter to the Frontline Charterers and for administrative support services. These agreements enhance the predictability and stability of our cash flows, by substantially fixing all of the operating expenses of our crude oil tankers and OBOs.

There is also a profit sharing agreement relating to the charter of the jack-up drilling rig West Prospero, whereby we will receive a profit share calculated as a percentage of the annual earnings above specified thresholds relating to milestones set under the charter. This profit sharing agreement became effective in 2009.

The charters for the drybulk carrier, the jack-up drilling rig, three ultra-deepwater drilling units, seven container vessels, six offshore supply vessels, two chemical tankers, the Suezmax tankers Glorycrown and Everbright and the VLCC Front Sabang are all on bareboat terms, under which the respective charterer will bear all operating and maintenance expenses.

Transaction history

In March 2010 we took delivery of Everbright, the second newbuilding Suezmax tanker which we had agreed to purchase in November 2006. Immediately upon delivery from the shipyard, the Everbright was sold on hire-purchase terms and commenced a five year bareboat charter with annual purchase options during the charter period and a purchase obligation at the end of the charter in March 2015.

In March 2010 we agreed to sell the single hull VLCC Golden River to an unrelated third party for a total consideration of approximately $13 million, with delivery to the new owner expected in April 2010.
In February 2010 we agreed to terminate agreements made in June 2007 relating to the acquisition of four newbuilding containerships for an aggregate cost of approximately $155 million. Concurrently, we have agreed to acquire seven newbuilding Handysize drybulk carriers with delivery expected in 2011 and 2012, for an aggregate construction cost of approximately $188 million.
In February 2010 we sold the VLCC Front Vista to a subsidiary of Frontline for an aggregate amount of approximately $59 million.
In November 2009 we took delivery of Glorycrown, one of the two newbuilding Suezmax tankers, which we had agreed to purchase in November 2006. Immediately upon delivery from the shipyard, Glorycrown was sold on hire-purchase terms and commenced a five year bareboat charter with annual purchase options during the charter period and a purchase obligation at the end of the charter in November 2014.
In November 2009 the single-hull VLCC Front Vanadis was delivered to its charterer, an unrelated third party, pursuant to the exercise of a pre-agreed option for a total consideration of approximately $12 million.
In July 2009 the jack-up drilling rig West Ceres was delivered to a subsidiary of Seadrill pursuant to the exercise of a pre-agreed option for a total consideration of approximately $135 million.
In July 2009 we agreed to sell the single-hull VLCC Front Duchess to an unrelated third party for a total consideration of approximately $19 million. The vessel was delivered to its new owner in September 2009.
September 2008: Acquisition of two ultra-deepwater semi-submersible drillingrigs for a total cost of $1.7 billion. The rigs were delivered in November 2008, and commenced 15-year bareboat charters to Seadrill. The contracted cash flow is in excess of $2.3 billion.
July 2008: Sale of two Suezmax newbuildings for a gross sales price of $111mill. per vessel with an expected book profit of a total of $68 mill. The vessels will be delivered to the new owner after delivery from the yard in 2009/2010 and commenced 15-year bareboat charter to Seadrill.
May 2008, acquired the ultra deep-water drillship newbuilding from Seadrill. The vessel was delivered in June 2008.
March 2008, acquired two newbuilding chemical tankers from Bryggen Shipping and Trading AS. The first vessels was delivered in April 2008 and the second vessel was delivered in October 2008.
March 2008, re-chartered the single-hull VLCC Front Sabang to an unrelated third party. The new charter is in the form of a hire-purchase agreement, where the vessel is chartered to the buyer for a 3.5 year period, with a purchase obligation at the end of the charter.
December 2007, sold Sea Trout a platform supply vessel to Deep Sea Supply Plc (.Deep Sea.). The vessel was delivered in January 2008.
December 2007, sold two non-double hull Suezmax tankers. The vessels were delivered in December 2007 and January 2008.
November 2007, acquired two offshore support vessels from Deep Sea
August 2007, acquired five offshore support vessels from Deep Sea
July 2007, acquired the 1,700 TEU container vessel Montemar Europa. The vessel, built in 2003, was delivered to us in August 2007.
June 2007, acquired five newbuilding container vessels with scheduled delivery in 2010.
June 2007, acquired 10% of the equity of Seachange Maritime LLC, a Miami based company that owns and charters containerships.
May 2007, re-chartered the single-hull VLCC Front Vanadis to an unrelated third party. The new charter is in the form of a hire-purchase agreement, where the vessel is chartered to the buyer for a 3.5 year period, with a purchase obligation at the end of the charter.
March 2007, acquired three newbuilding seismic vessels, including complete seismic equipment, from SCAN Geophysical. The vessels are scheduled to be delivered in 2008.
February 2007, aquired two newbuilding Capesize vessels contracts from Golden Ocean. Delivery from the shipyard is scheduled in the fourth quarter of 2008 and first quarter of 2009.
January 2007, acquired a newbuilding jack-up drilling rig currently under construction from SeaDrill Invest II Ltd, a wholly owned subsidiary of Seadrill. The rig was delivered in June 2007.
January 2007, sold the single-hull Suezmax tanker Front Transporter. The vessel was delivered to its new owner in March 2007.
January 2007, sold a total of five single-hull Suezmax tankers to Frontline. The vessels were delivered to Frontline in March 2007.
December 2006, sold the VLCC Front Tobago to an unrelated third party.
November 2006, acquired two newbuilding Suezmax contracts from Frontline with delivery expected in the first quarter of 2009 and third quarter of 2009.
July 2006, acquired the Panamax dry bulk carrier Golden Shadow from Golden Ocean. The vessel was delivered to us in September 2006.
June 2006, acquired, the jack-up drilling rig West Ceres from SeaDrill Invest I Ltd, a wholly owned subsidiary of Seadrill.
April 2006, acquired five 2,824 TEU container vessels built at Hyundai Mipo yard in Korea from Horizon Lines. Under this agreement the Horizon Hunter was delivered in November 2006, the Horizon Hawk in March 2007, Horizon Eagle and Horizon Falcon in April 2007 and the final vessel, Horizon Tiger in May 2007.
January 2006, acquired the VLCC Front Tobago from Frontline.
November 2005, the bareboat charterer of the VLCC Navix Astral exercised an option to purchase the vessel. The vessel was delivered to its new owner in January 2006.
August 2005, sold a Suezmax tanker, the Front Hunter to an unrelated third party.
June 2005, acquired two vessel owning companies, each owning one 2004 built VLCC from parties affiliated with Hemen.
May 2005, acquired two vessel owning companies, each owning one 2005 built containership, Sea Alfa and Sea Beta, from parties affiliated with Hemen.
May 2005, acquired three Suezmax tankers from Frontline, the Front Traveller, Front Transporter, and Front Target.
May 2005, sold the three Suezmax tankers, Front Lillo, Front Emperor and Front Spirit. These vessels were delivered to their new owners in June 2005.
January 2005, sold a Suezmax tanker, the Front Fighter, to an unrelated third party. The vessel was delivered to its new owner in March 2005.
January 2005, we exercised the option to acquire the VLCC Oscilla
January to March 2005, acquired three additional double hull VLCCs from Frontline.
January 2004, purchased the initial 46 vessel owning subsidiaries from Frontline. Additionally Ship Finance purchased Frontline's option to acquire an additional VLCC.

Company Facts

History