John Fredriksen's shipowning vehicle SFL Corp has taken an impairment hit from offshore support vessels (OSVs) by terminating three bareboat deals with Solstad Offshore.
SFL recorded non-cash charges of $34.1m in the fourth quarter related to five OSVs it charters to the Norwegian operator, in which Fredriksen also has a stake.
This month, SFL has agreed to end three of the bareboat deals, "given the market outlook for these particular vessels", it said.
Solstad said the ships are the 15,000-hp medium-size anchor-handling tug supply ships Sea Cheetah, Sea Jaguar (both built 2015) and Sea Leopard (built 1998).
All three vessels have been laid up since 2016 in "very challenging" markets, according to SFL.
Two of them have been sold to an unrelated third party, while the third will be scrapped in Norway at a green recycling yard according to the European Ship Recycling Regulation, SFL added.
The two remaining units, which are platform supply vessels, remain on bareboat charters to Solstad.
SFL's offshore assets, including the Solstad quintet and three drilling rigs, generated $26.5m in charter hire in the fourth quarter.
Standstill deal unaffected
Solstad is trying to agree a refinancing deal with lenders to boost liquidity.
"In light of the difficult market, Solstad has announced that it will have to restructure its balance sheet and has agreed a standstill agreement with stakeholders and lenders, including SFL, until March 31, 2020," SFL said.
"The termination is not affecting the ongoing standstill agreement."
More profit and dividends
SFL's net profit in the fourth quarter was $23.64m, compared with $3.82m in the third.
Revenue from its mixed fleet rose to $119.87m from $111.52m.
The company has declared its 64th consecutive quarterly dividend, of $0.35 per share.
A sale of Frontline shares in the period generated more than $100m.
It added $224m to the backlog of contracted future charter hire through vessel deliveries, in addition to charter extensions and amendments in connection with scrubber installations.
Chief executive Ole Hjertaker said: “SFL Corp is entering the new decade with a strong balance sheet and significant capital available for new investments.
"We have now declared our 64th consecutive dividend, and have been profitable every quarter since our inception, which is a unique combination in the maritime world."
The fixed-rate charter backlog from the company’s fleet of 88 vessels and rigs was $3.6bn at year-end, with an average remaining charter term of 4.5 years.
