Ship Finance International Ltd. (SFI) said Tuesday it expects to close on the sale of 6 million common shares in a secondary offering this Friday.
On Monday the closing price of SFI's common shares on the New York Stock Exchange was $16 per share. On Tuesday they closed at $14.98 per share, making 6 million shares worth about $90 million.
SFI owns ships and oil rigs, many operated by companes affiliated with shipping magnate John Fredriksen. Fredriksen's companies include Frontline, Seadrill, Golar LNG, and Golden Ocean Group.
SFI said shares purchased by the underwriter Morgan Stanley "are expected to be offered for resale from time to time in negotiated transactions or otherwise, on the New York Stock Exchange at market prices prevailing at the time of sale, at prices related to such prevailing market prices or otherwise."
The company said it intends to use the net proceeds of this offering to invest in new assets within the shipping and offshore sectors and for general corporate purposes. SFI said it is "advanced discussions regarding the acquisition of two modern car carriers from unrelated third parties. We are also in discussions with an unrelated logistics company to charter the vessels out for a period of five years. If purchased, expected delivery of the vessels would take place in the fourth quarter of 2012."
In the prospectus
for the share offering, SFI notes that in April 2012, it agreed to terminate long-term bareboat charters with Horizon Lines for five 2,800-TEU containerships, which had been used in its now-discontinued transpacific service. Horizon had compensated it with $40 million nominal value in second lien notes in Horizon and warrants exercisable into 10 percent of the common stock.
Horizon agreed to pay SFI's expenses to reactivate out of layup and reposition the vessels. Three of the five vessels are chartered out on short-term charters and the remaining two vessels have recently been reactivated and are seeking employment, SFI said, adding that it intends to employ the containerships in the short-term market until long-term rates recover. - Chris Dupin