Ship Finance International Limited (NYSE: SFL) (“Ship Finance” or the “Company”) announces that the Company and certain of its subsidiaries have entered into a restructuring agreement in connection with a comprehensive restructuring of Seadrill Limited and certain of its subsidiaries (“Seadrill”).

Seadrill has filed prearranged chapter 11 cases in the Southern District of Texas together with the agreed restructuring plan. This is supported by secured lenders representing more than two-thirds of each of its secured credit facilities, approximately 40 percent of its bondholders and a consortium of investors. The Company and three of the Company’s subsidiaries, who own and lease the drilling rigs West Linus, West Hercules and West Taurus to Seadrill, have also entered into the restructuring agreement.

In addition to raising $1.06 billion of new capital, Seadrill will extend and re-profile the secured bank debt and reduce leverage. The agreement should provide Seadrill with a five-year runway and a bridge to an industry recovery.

As part of the restructuring plan, Ship Finance and its relevant subsidiaries have agreed to reduce the contractual charter hire by approximately 30% for a 5-year period starting in 2018, with the reduced amounts added back in the period thereafter. The leases for West Hercules and West Taurus will also be extended for a period of 13 months until December 2024.

Concurrently, the banks who finance the three rigs have agreed to extend the loan period by approximately four years, with reduced amortization in the extension period compared to today’s level. The net cash flow from the three rigs in the extension period is estimated to approximately $29 million per year, or approximately $0.08 per share per quarter, net of loan interest and amortization.

Ole B. Hjertaker, CEO of Ship Finance Management AS, said in a comment: “Seadrill has for a long period communicated the need for a restructuring of its balance sheet in order to meet its operational and financial commitments. We are very happy to see that there is strong support for the restructuring from existing stakeholders and also new money investors.

The uncertainty on timing of the restructuring and impact on our leases has been negative for us and our investors. We are happy to announce a comprehensive solution where we are an integral part and with revised terms that will facilitate continued cash flow from the three rigs. The Board adjusted the dividend in connection with the latest quarterly report in August, and we can now focus on new asset acquisitions, with the aim to build our distribution capacity going forward.”