EmailShip Finance Intl (SFL $11.21 0.19) announced that it has agreed, subject to final board and bank financing approvals, to amend the terms of the long-term chartering agreements with Frontline (FRO $4.56 +1.02). This will happen concurrently with a proposed recapitalization of Frontline, where some of their assets will be sold and a significant capital commitment relating to newbuildings will be transferred to a new company to be established, Frontline 2012.
The company will receive a restructuring compensation of $106 million in cash from Frontline, including the release of $56 million restricted cash currently serving as security for their charter payments to us.
The remaining $50 million will be an early payment of profit split, and will effectively be used to offset future profit split revenues over and above the old base rate. There will also be an adjustment to the profit split calculation whereby Ship Finance will get 100% up to the old base rate levels, and 25% profit split above that. The profit split will be payable on an annual basis as before.
