Ship Finance (SFL) Announces Larger Conv. Notes Offering

September 30, 2016 8:35 AM EDT

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Ship Finance International Limited (NYSE: SFL) announced that it has increased the size of the public offering of its Convertible Senior Notes due 2021 (the "Notes") announced September 29, 2016 by $25 million, to a total of $225 million aggregate principal amount.

In addition, Ship Finance announced the pricing of its offering of $225 million aggregate principal amount of the Notes. The Notes will pay interest quarterly in arrears at a rate of 5.75% per annum and will mature on October 15, 2021, unless earlier repurchased, redeemed or converted. The Notes will be convertible, at any time prior to the close of business on the second scheduled trading day prior to the maturity date, into, cash, our common shares, or a combination of cash and our common shares, at the Company's election, as further described in the offering prospectus. The conversion rate for the Notes will initially be 56.2596 common of our common shares per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $17.77 per common share, and is subject to adjustment under the terms of the Notes. The conversion rate of the Notes will be adjusted for dividends in excess of $0.225 per quarter, subject to adjustment.

The Company intends to use the net proceeds received from the offering of the Notes for general corporate purposes, including working capital and the repurchase of all or a portion of its existing 3.25% convertible notes.

In connection with the Company's offering of the Notes, a subsidiary of the Company will enter into a share lending agreement with affiliates of Jefferies LLC, one of the underwriters of the Notes offering, (the "Share Borrower"), under which it will lend to the Share Borrower up to 8 million of the Company's common shares. None of the borrowed shares are newly-issued common shares. Instead, the shares are provided by way of a loan from one of Ship Finance's largest shareholders, which is an affiliate of the Company.

Purchasers of the Notes may separately sell up to 8 million of the Company's common shares that they may borrow through the Share Borrower. The Company expects that the selling shareholders will use the short position created by such sale to hedge their respective investments in the Notes. Neither the Company, nor its subsidiaries, nor its shareholders will receive any proceeds from the sale of the borrowed shares.

Jefferies LLC, ABG Sundal Collier, Inc. and Morgan Stanley & Co. LLC are acting as book-running managers for the offering of the Notes, and Clarksons Platou Securities, Inc. and Seaport Global Securities LLC are acting as co-managers for the offering of the Notes.

The offering of the Notes is being made, and the offering of the Common Shares will be made, under separate prospectus supplements under the Company's existing shelf registration statement filed with the Securities and Exchange Commission on September 26, 2016.

The offering of the Notes is being made, and the offering of the Common Shares will be made, by means of separate prospectus supplements to the prospectus forming a part of the Company's shelf registration statement and other related documents. You may obtain these documents for free by visiting EDGAR on the Securities and Exchange Commission website at www.sec.gov. Alternatively, copies of the preliminary prospectus supplement may be obtained from Jefferies LLC, Attention: Equity Syndicate Prospectus Department, 520 Madison Avenue, 2nd Floor, New York, NY, 10022, by email at Prospectus_Department@Jefferies.com or by phone at +1 877-821-7388, ABG Sundal Collier Inc., Douglas Miller, 850 Third Avenue, Suite 9-C, New York, New York 10022, douglas.miller@abgsc.com, +1 212-605-3827, or Morgan Stanley & Co. LLC, 180 Varick Street, 2nd Floor, New York, New York 10014, Attention: Prospectus Department. Before you invest, you should read the prospectus supplements and accompanying base prospectus along with other documents that the Company has filed with the Securities and Exchange Commission for more complete information about the Company and these offerings.



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