Good day. And welcome to the Q1 2014 Ship Finance International Limited Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Ole Hjertaker. Please go ahead, sir.

Thank you. And welcome, everyone, to Ship Finance International and our first quarter conference call. With me here today, I also have our CFO, Harald Gurvin; and Senior Vice President, Magnus Valeberg. Before we begin our presentation, I would like to note that this conference call will contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words such as expects, anticipates, intends, estimates or similar expressions are intended to identify these forward-looking statements. These statements are based on our current plans and expectations, and involve risks and uncertainties that could cause future activities and results of operations to be materially different from those set forth in the forward-looking statements. Important factors that could cause actual results to differ include conditions in the shipping, offshore and credit markets. For further information, please refer to Ship Finance's reports and filings with the Securities and Exchange Commission. The Board has again increased the cash dividend and it is now $0.41 per share. This is incidentally also the 41st consecutive dividend declared by the company. The dividend represents $1.64 per share on an annualized basis or 9% dividend yield based on closing price on Friday. Net income for the quarter was $41 million or $0.44 per share. Aggregate charter revenues recorded in the quarter, including 100%-owned subsidiaries accounted for as investment in associates was approximately $160 million. This is including the $11.7 million or approximately $0.13 per share cash sweep from the Frontline vessels in the quarter. EBITDA equivalent cash flow in the second quarter was approximately $130 million and last 12 months, the EBITDA equivalent was approximately $490 million. Several new assets will be delivered to a fleet in 2014 and we have significant capital available for new accretive investments. In the fourth quarter and including…

Thank you, Ole. On this slide, we have shown our pro forma illustration of cash flows for the first quarter compared to the fourth quarter of 2013. Please note that this is only a guideline to assess the company's performance and is not is in accordance with U.S. GAAP. For the first quarter, total charter revenues were $147.9 million or $1.59 per share compared to $151.9 million in the previous quarter. Revenues from VLCCs was slightly down due to the sale of two older VLCCs during the fourth quarter, while revenues from Suezmaxes were up in the first quarter due to basic earnings on the two Suezmaxes trading in the spot market. Revenues from liners which increased container vessels and car carriers was down in the quarter following CMA CGM’s exercise of purchase options for the two 13,800 TEU container vessels which were delivered to them in end of January and beginning of March this year. This is also reflected in the total operating expenses for the quarter. The increase in offshore revenues is due to West Linus being delivered in February of 2014. The rig dayrate was lower during the initial mobilization period but the rig is now earning full day rate following commencement of the sub-charter to ConocoPhillips in end of May which will have a full effect in the third quarter. Vessel operating expenses and G&A were $34 million compared to $41.2 million in the previous quarter, mainly due to the exercise options on the two CMA CGM vessels and no dry dockings in the first quarter. We recorded a cash sweep of $11.7 million from Frontline in the first quarter representing a full cash sweep on all Frontline vessels and also a profit share of approximately $500,000 relating to four of the Handysize drybulk carriers. Income…

Thank you. (Operator Instructions) We’ll now take our first question from Fotis Giannakoulis. Please go ahead.

Yes. Good morning, guys and congratulations for all this good new deals. I just want to ask you to give us a little bit more color to define these acquisitions and these charters that you announced. First of all, how was the German KG market and what was the background behind this charter with the container line, did this deal come from banks or it came directly from the liner companies?

Yes. And I know you referred to the line 4,100, 5,800 TEU containerships, right?

That is correct, yes.

Yes, thank you for this. Well, these KGs had filed for insolvency a couple of months ago. So there were actually a couple of players out there who were looking at the vessels and expecting the vessels. The KGs were under administration by the bank, by the appointed administrator and the banks were willing to sell or let the KG sell the asset and then effectively face the music and the losses relating to their exposure. What we did we teamed up with the charterer in this instance, and therefore, we went in and did for the vessels on -- basically on cash basis and we managed the cost because of who we are we believe. I would think that the banks would know that we could pay off and actually perform on the new obligation. So we won the asset basically. And at the same time, we had the arrangement with the charters lined up, so we could combine like that. I think we would have been a little bit careful with buying the vessels just based on the spot market or based on deployment in the spot market because the market there is really soft. I would say you can charter any vessel virtually up to 5,000 TEU and the charter revenues will just barely cover your operating expenses and there will be nothing left for the capital. Instead, we secured a long-term charter, which is servicing the capital. It was giving us a nice return. And also based on where bought the asset and the scrap value, we have a very, very comfortable call it exposure. So we can say that well if the vessels have to be scrapped at the end of the charters, so be it, even if you scrapped it, it would be a very nice deal. But we believe the specification of these vessels will -- could give these vessels a significantly longer life than the base charter period.

Thank you. Can you tell us -- give us some idea over the returns that you’re expecting of how much equity are you investing and what will the financing that this deal comes together with?

Well, we bought the vessels for cash. And you can say that cash return on the deal is in the 12% to 13% range if you compare the EBITDA contribution and the investment. But we have had banks contacting us who are very keen on financing so we will look into most -- putting some relatively small financing amount on these vessels which will enhance quality equity return. But we believe particularly based on where we bought the assets which is only a fraction of construction price, high specifications we believe these assets may well have a very good value going forward. Most, many or several of these vessels have already been deployed in the new trade by the charterer where they have replaced reefers -- dedicated reefer vessels, because one of the unique features here is that these have very high reefer capacity and the one that we built in 2002 I believe they were the biggest reefer vessels in the world.

Thank you. Would that be too much to ask how much equity have you invested in this deal (indiscernible) disclose?

Well. Yeah. We have not given the exact numbers, but I would think that at the end we would be looking at sort of let say $40 million to $50 million call it equity investment...

Okay.

… we secure, but as we have not concluded it, it’s a little bit early to give you specific details.

Okay. Thank you. That’s very helpful. And regarding the acquisition of the Kamsarmax vessels, what kind of returns are you expecting there and I assume these are new vessels, you would get some financing, what kind of that debt financing we expect there?

Well, similar for these vessels and that’s maybe the benefit of having a strong balance sheet as we do have. We can go and do transactions without having financing subject etcetera. So when we see a deal where we see good strong vessels, so we see a strong chartering counterpart, we’ve seen strengthening in the financing markets recently where banks are, I would say compared to a year there are a lot more banks out there who are very keen to financing the segment. We have comfort to go ahead and do acquisitions without financing subject. So at the same this deal similar to the containers vessels we have talked about, we concluded the deal without any financing subject. We do of course expect the financing to be secured, but we have not done that yet.

And in terms of returns, I mean, this is a very interesting transaction, I didn’t expect that there are available this kind of long-term contracts for drybulk vessels. Can you give us an idea of the cash on cash return that you are getting right now?

Well, the cash on cash return is relatively in line with container vessels I would say, as I mentioned, but we plan to arrange financing in due course. So as we cannot communicate the acquisition price, it’s a little bit awkward for me to be too specific on that other than that cash on cash returns are good. And then we believe there is also good opportunities linked to the residual value there because there are no purchase options or extension options for the charterer on these vessels.

I fully understand. Thank you this answer. And in terms of additional opportunities, obviously these deals will have opening vessels appetite for a more transactions, where are the opportunities more possible to arise, is it drybulk of containership sector or other sectors that you are exploring right now?

I would say right now we are looking at deals across all our four main sectors. We are looking at offshore related opportunities. We are looking at tankers. We are looking at bulkers and containerships. Generally, I would say that bulkers is the segment where we have also communicated previously, it’s a segment where we are obviously more careful because we see more counterparty issues in that segment as we also experienced with the four handysize bulkers where we’ve received the settlement recently. So while in the container and offshore space, you see more long-term chartering opportunities. But we also and we are selective and we are out there, I think, one of the benefits we have and that’s also with the association to Mr. Fredriksen and I think we’re standing in the market. I think we see a good, a lot of deal opportunities. So, hopefully, overtime by picking deals, we can perhaps secure better long-term returns then we would certainly then we would have only looked at one single segment.

Thank you. And if you had to give us your outlook for over the next couple of years for each of the sector that you are involved, what would that be given the current weakness of both drybulk and the tanker markets?

Yes. I think with our business model, we are set up so we can invest and make hopefully good transactions, both in the low cycle and also in the high cycle. I would say that the deepwater rigs that we structured back in 2008 was a good example of how we structure deals when asset prices are peaking, restructured to front-loaded charter payment, reducing asset exposure quickly and also financial average. When we’re down in the cycle, we can do shorter charters, take more asset exposure like we order four 9,000 TEU container vessels on speculation in year ago. And as we consider it and basically get better returns by having a little bit patience and ice in our stomach. What we have done also in the past is acquiring vessels from one party and finding the charter and combining -- where we combine the charter, which also gives us interesting opportunity. So, well, I don’t want to give specific guidance on markets. I would say that there are definitely opportunities in all these segments, but we structure the deal very differently, depending on where we believe we are in the cycle.

Okay. Thank you very much, Ole. Thank you for your answers.

Thank you, Fotis.

Thank you. We will now take our next question from Herman Hildan, RS Platou Markets. Please go ahead.

Good afternoon, guys.

Hello, Herman.

Hi. Just a quick question, I’m wondering, you must have booked Frontline bond [73%] at par, if you look at the unsecured bond in Frontline it’s shooting up 92%, is there any particular reason, why your rig been sold off?

No other particular reason then at the time, we had a preference for booking it as conservatively as we could under U.S. GAAP and that’s the number we came up with. I mean, we have our claim for the full amount and as you hopefully -- we also have seen in the past that we look after our interest and of course, expect Frontline to perform on their obligations.

Yes. Okay. And also you mentioned that some opportunities in the tanker market as well, any particular segments like the example of Suezmax segment where you see deals?

I would say we see deals in several sub segments in the tanker space. Also both on the crude side but also on products chemical, we see deal opportunity in the gas. So it’s a difficult answer. I mean, we’re looking at a lot of opportunities but of course, not everything materializes. So, I think we prefer to comment on when we do the transactions. But I think we have the flexibility to look at multiple broader segments and also a lot of the sub segments. What we typically prefer is commodity type of assets. And we have call it bigger group of companies, we have exposure to many of the sub segments and can find employment if need be. If and when we get the vessels back, I need to employ them ourselves in the market, like we’re doing in the Suezmax market where we have two modern Suezmaxes that we’re operating effectively in the spot market.

To be a bit more precise, I mean, should we get some plan that’s being kind of derisking by ATM offering and as we mentioned a very low leverage on those aspects. Would you wait until call it the balance sheet sometime it’s fully repaid or are you willing to do deals with and call it potential restructuring?

Well, a prominent shipowner once said, the fat lady has not sung yet. Then, I think, that is certainly also the case with the Frontline, where we see -- where it’s still too early to tell exactly what the solution will be. But we look after our interests. We have 20 vessels remaining on charter to Frontline and we actually saw in the first quarter, the market may surprise us. And if we look at the analyst expectations like yourself, we should base it on those kind of the projections both later in 2014 and certainly in 2015, the markets could change. So other than that I cannot really comment on the Frontline situation. They are fully performing on the obligations and they have not been late with any payments to us.

Okay. Thank you very much.

Thank you.

Thank you. Our next question is from [Kenneth Coleman] (ph), private investor. Please go ahead.

Yes. Good morning and thank you for the fine report. My question is also revolved around Frontline. So I think you’ve addressed them probably as much we’d like. Thank you.

Thank you.

Thank you. As there are no further questions, I would like to turn the call back to the speaker for any additional or closing remarks.

Well, thank you. And thank you everyone for joining our first quarter conference call. And as we hopefully conveyed in the calls, we are of course happy to again increase our quarterly distribution. And we believe there are good opportunities out there to continue building our portfolio with creating accretive investments. If you do have any follow-up questions, there are contact details in the press release. And with that I wish you all a very nice day.

Thank you. That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.