SEC Company Response from SFL Corp Ltd. (SFL) (CIK 0001289877) (SFL) — Jul 20, 2012
SFL Corp Ltd. (SFL) (CIK 0001289877)
Date: July 20, 2012 · CIK: 0001289877 · Accession: 0000919574-12-004360
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-32199
Referenced dates: July 5, 2012
Letter
Division of Corporation Finance Securities and Exchange Commission Attention: Mr. David R. Humphrey Ship Finance International Limited Form 20-F: For the year ended December 31, 2011 Filed April 27, 2012 File No. 001-32199
Dear Mr. Humphrey:
On behalf of Ship Finance International Limited (the "Company"), we submit this response to your letter dated July 5, 2012, in which the staff (the "Staff") of the Securities and Exchange Commission (the "Commission") provided comments relating to the Company's annual report on Form 20-F for the fiscal year ended December 31, 2011. The Company's responses, together with the Staff's comments, are set forth below.
Item 5. Operating and Financial Review and Prospects, page 47
Vessel Market Values, page 53
1.
In the table on page 54, you separate your fleet into four categories. However, on page 47, you present a summary of your fleet with seven vessel types and, on page 28, you state that your asset base currently has eight asset types. Please revise, as appropriate, to consistently present information about your fleet.
The Company notes Staff's comments and advises the Staff that in future filings a consistent presentation of information will be made in line with the Company's business strategy with disclosure across eight asset types and four market sectors. This will include changes to the presentation of the table on page 47 to ensure consistency across the annual report and an explanation on page 54 that the assets are grouped according to relevant market sectors.
The Company has eight asset types which operate in four principal markets: (1) the tanker market; (2) the drybulk shipping market; (3) the containership market and (4) the offshore market. A market overview is presented on pages 57-59 for each of these market sectors to give the reader an understanding of economic factors driving charter rates and vessel market values.
The information presented in the table on page 47 (seven vessel types) combines the OBO carriers with drybulk carriers due to the fact that the OBO carriers are currently configured to carry drybulk cargo as noted on page 24. The discussion on page 54 concerns vessel market values which are impacted by market dynamics. Therefore, the table on page 54 is presented at summary level in the context of the market in which the vessels operate and consequently combines the oil tankers with the chemical tankers, the drybulk carriers with the OBO carriers, and the offshore supply vessels with the ultra deepwater drilling units and the jack-up drilling rig. The Company will modify the table on page 47 in future filings to consistently present eight asset types as noted on page 28 and add an explanation on page 54 that the vessels are grouped by the markets within which they operate.
2.
The table on page 54 totals $4,547 million but you only have $2,896 million of total assets at December 31, 2011. Please reconcile the aggregate carrying value of your fleet shown in the table on page 54 to the corresponding amounts in your financial statements.
The Company can reconcile the aggregate carrying value of its fleet as presented in the table on page 54 to the corresponding amounts in the financial statements as follows:
(in millions of $)
Carrying value at December 31, 2011
4,547
Less: carrying value of assets owned by wholly-owned subsidiaries accounted for under the equity method:
-SFL West Polaris Limited – West Polaris offshore drill unit
(611 )
-SFL Deepwater Limited – West Taurus and West Hercules offshore drill units
(1,240 )
Less: costs to completion of newbuildings included within the carrying value
(275 )
Less: unamortized deferred equity contribution included within investment in direct financing and sales-type leases
(164 )
Less: unamortized gains included within investment in direct financing and sales-type leases
(16 )
Aggregate balance of net vessels and equipment, newbuildings, and current and long-term portion of investment in direct financing and sales-type leases
2,241
Aggregate balance of other assets reported on the balance sheet
Total assets
2,896
Liquidity and capital resources
3.
We note that you list a number of loan agreements on page 65, and that you describe each of these loan agreements in detail on pages 67-71. In this regard, we believe your disclosure could be enhanced by first providing an overall summary of your borrowings. In this overall summary, we suggest you present separately the aggregate amounts of (i) loan facilities secured with mortgages on vessels and rigs including newbuildings, (ii) loan facilities secured with a portion of your 8.5% Senior Notes which are held as treasury notes, (iii) loan facilities secured by holdings of securities (other than your 8.5% Senior Notes), and (iv) unsecured borrowings. In addition to the amounts outstanding, please indicate the amounts undrawn and/or available for borrowing at the most recent balance sheet date.
The Company acknowledges Staff's suggestions and will in future filings, provide an overall summary of its borrowings, which will include the disclosures presented in the table below.
As of December 31, 2011
(in millions of $)
Utilized
Available
Loan facilities secured with mortgages on vessels and rigs
including new buildings
1,366.7
-
Loan facilities secured against 8.5% Senior Notes held as treasury notes
70.0
-
Loan facilities secured against investment in securities
-
11.7
Unsecured borrowings:
-8.5% Senior Notes due 2013
274.2
-
-NOK500 million senior unsecured bonds due 2014
74.6
-
-3.75% senior unsecured convertible bonds due 2016
125.0
-
1,910.5
11.7
As of December 31, 2011, $11.7 million of the $55.0 million secured securities facility was available for borrowing based on 50% of the market value of the Company's investment in marketable securities.
4.
Based on the amounts shown on your 2011 balance sheet for net vessels and equipment, newbuildings, and the current and long-term portion of investment in direct financing and sales-type leases, which amounts total $2,241 million, it appears (since this same amount is shown in Note 23 to your financial statements) that all of your vessels and rigs are pledged under mortgages. If all your vessels and rigs are pledged, please add specific disclosure to this effect in MD&A. Also, discuss how you were able to obtain additional financing (on an unsecured basis) even though all of your vessels are encumbered.
The Company notes Staff's comment and confirms that all of the Company's vessels and rigs are pledged under mortgages and that for future filings this specific disclosure will be added in MD&A.
The Company and its equity-accounted subsidiaries fund their acquisition of new vessels and rigs through a combination of equity and long-term debt. Providers of such long-term loan facilities usually require that the loans be secured by mortgages against the assets being acquired.
As of December 31, 2011, the Company had total outstanding indebtedness of $3.3 billion under its various credit facilities, including those of its equity-accounted subsidiaries. All of the Company's vessels and rigs including those of its equity-accounted subsidiaries have been pledged under mortgages in respect of this outstanding indebtedness.
The Company also has in place unsecured borrowings in the form of 8.5% Senior Notes due 2013, NOK500 million senior unsecured bonds due 2014 and 3.75% senior unsecured convertible bonds due 2016. In line with other companies, unsecured financing is available to the Company. Providers of unsecured financing will look at a company's assets, cash flow, net income or other factors in the context of its overall secured financing level, which affects the terms on which unsecured financing can be achieved. In general, such unsecured financing is a more expensive form of borrowing compared to borrowing with collateral, but it has been available.
Borrowings, page 67
5.
At the top of page 71, you describe a $55 million secured securities financing arrangement with a bank. In addition, we note from your financial statements that you acquired over $23 million of available for sale securities during 2011, and that you hold a long–term investment in shares which are not publicly traded. Please expand your disclosures in MD&A to discuss your investment policy and management's intentions with respect to the use of borrowings to invest in securities.
The Company notes Staff's comments and advises Staff that it will include in the MD&A for future filings, a discussion of its investment policy and management's intentions with respect to the use of borrowings to invest in securities.
Subject to the approval of the Board of Directors on a case by case basis, the Company may deploy some of its surplus funds to acquire equity or debt interests in other companies with a view to generating competitive returns.
The Company may invest in such marketable securities using its surplus funds or a combination of its surplus funds and credit facility arranged specifically for such investments. The treasury function manages the Company's debt and has a responsibility for procuring borrowing facilities for short term needs and also for long term needs, on a cost effective basis as and when required to support the Company's strategy. The $55 million secured securities financing agreement is an example of the potential to use borrowings to invest in securities to earn a commercial return, although the facility has not been utilized as at December 31, 2011. The facility may only be used to fund up to 50% of the acquisition cost of debt securities and comes with a covenant that requires a minimum value of securities to be held as collateral. The facility bears interest at LIBOR plus a margin and is secured against the relevant securities. The Company's investment policy supports the business strategy outlined in pages 28-29.
6.
In your description of the $700 million loan facility entered into by SFL West Polaris with a syndicate of banks, you state that such lenders have limited recourse to Ship Finance as the holding company currently only guarantees $70 million of the debt. However, on page F-18, in Note 15 to your financial statements, you state that $80 million of this debt is guaranteed at December 31, 2011. Please reconcile these disclosures.
Under the terms of the $700 million loan facility, lenders have limited recourse to Ship Finance under a reducing guarantee. The amount of the guarantee decreases as the outstanding loan amount falls as follows:
'The Guarantor's maximum liability under this Guarantee is limited to:
(a)
USD 100,000,000 as long as the Loan is equal to or exceeding USD 620,000,000;
(b)
USD 90,000,000 as long as the Loan is less than USD 620,000,000 but equal to or exceeding USD 540,000,000;
(c)
USD 80,000,000 as long as the Loan is less than USD 540,000,000 but equal to or exceeding USD 450,000,000; and
(d)
USD 70,000,000 as long as the Loan is less than USD 450,000,000.'
At December 31, 2011, the amount outstanding under this facility was $470 million. In Note 15 on page F-18, the Company has disclosed $80 million of the debt is guaranteed under this facility in line with the facility document. At the time of filing the 20-F, the amount outstanding under this facility was less than $450 million. Accordingly, the MD&A which reports the current position as at the filing date, reflects a reduced guarantee figure of $70 million in line with the facilities agreement. The Company will in future filings, expand its description of this guarantee in the MD&A to include a reconciliation of any differences arising from measurement at different dates.
Minimum Value Covenants
7.
You state that most of your loan facilities are secured with mortgages on vessels and rigs, and that you had borrowings totaling $2.4 billion with minimum value covenants. However, according to the table on page F-21, you only had $1.9 billion of total debt at December 31, 2011. Please reconcile these disclosures.
As noted, certain loan facilities require a minimum value covenant which requires the Company to maintain a minimum ratio between market value of pledged assets and loan outstanding. The Company's reconciliation between the $2.4 billion of borrowings with minimum value covenants and $1.9 billion of total debt at December 31, 2011 is as follows:
(in billions of $)
As of
December 31, 2011
Borrowings with minimum (vessel and rig) value covenants
2.4
Less: Borrowings of wholly-owned subsidiaries accounted for under the equity method
-SFL West Polaris Limited – West Polaris offshore drill unit
(0.5 )
-SFL Deepwater Limited – West Taurus and West Hercules offshore
drill units
(0.9 )
Add: Borrowings with no minimum (vessel or rig) value covenants
0.9
Total borrowings
1.9
The Company will in future filings, modify its description of the minimum value covenants in the MD&A to state the amount of any borrowings of its equity-accounted subsidiaries that are included.
8.
We note that you include financial statements of SFL Deepwater pursuant to Rule 3-09 of Regulation S-X. In light of the overall significance of SFL West Polaris to your business, and the fact that you guarantee $80 million of its debt at December 31, 2011, please tell us what consideration you gave to including the financial statements of SFL West Polaris in your filing. See Rule 3-13 of Regulation S-X.
In consideration of the disclosure requirements of Rule 3-09, the Company performed the Rule 1-02(w) significance test substituting 20% for 10%. The Company determined that the SFL West Polaris did not satisfy that significance test requiring the inclusion of separate financial statements. A summary of the SFL West Polaris 2011 significance test calculation is provided below:
(a) Investment test
(in thousands of $)
As of
December 31, 2011
Investment and advances to SFL West Polaris
145,000
Group consolidated total assets
2,896,128
Investment in and advances to SFL West Polaris as a % of Group consolidated total assets
%
(b) Income test
(in thousands of $)
For the year ended December 31, 2011
Net income before tax of SFL West Polaris
12,806
Group consolidated income before taxes 1
167,761
Equity in net income before taxes of investees as a % of Group net income before taxes
%
(1) Represents the average of the income for the last five fiscal years as the reduction in income in 2011 compared with 2010 is more than 10%.
The "asset test" in Rule 1-02(w) has been excluded in accordance with guidance in the SEC's Division of Corporation Finance Financial Reporting Manual section 2410.1.
The Company considered the filing of the SFL West Polaris financial statements under the significance test rules noted above. The Company notes the Staff's reference to Rule 3-13 of Regulation S-X and the possibility of informal written notice requiring the filing of the SFL West Polaris financial statements. The Company's view is that the disclosures in Note 15 wherein summarized financial statements of West Polaris for the current and preceding fiscal years are presented provides an accurate description of the operations, assets, liabilities and performance of the entity. The significant items on SFL West Polaris' financial statements are its drillship, loan facility and leasing arrangement with Seadrill Polaris Ltd. These items are discussed in sufficient detail under note 15, including the Company's guarantee of up to $80 million of SFL West Polaris' debt as of December 3
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CORRESP
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Seward & Kissel llp
ONE BATTERY PARK PLAZA
NEW YORK, NEW YORK 10004
TELEPHONE: (212) 574-1200
FACSIMILE: (212) 480-8421
WWW.SEWKIS.COM
901 K STREET, NW
WASHINGTON, D.C. 20001
TELEPHONE: (202) 737-8833
FACSIMILE: (202) 737-5184
July 19, 2012
BY EDGAR
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington D.C. 20549
Attention: Mr. David R. Humphrey
Re:
Ship Finance International Limited
Form 20-F: For the year ended December 31, 2011
Filed April 27, 2012
File No. 001-32199
Dear Mr. Humphrey:
On behalf of Ship Finance International Limited (the "Company"), we submit this response to your letter dated July 5, 2012, in which the staff (the "Staff") of the Securities and Exchange Commission (the "Commission") provided comments relating to the Company's annual report on Form 20-F for the fiscal year ended December 31, 2011. The Company's responses, together with the Staff's comments, are set forth below.
Item 5. Operating and Financial Review and Prospects, page 47
Vessel Market Values, page 53
1.
In the table on page 54, you separate your fleet into four categories. However, on page 47, you present a summary of your fleet with seven vessel types and, on page 28, you state that your asset base currently has eight asset types. Please revise, as appropriate, to consistently present information about your fleet.
The Company notes Staff's comments and advises the Staff that in future filings a consistent presentation of information will be made in line with the Company's business strategy with disclosure across eight asset types and four market sectors. This will include changes to the presentation of the table on page 47 to ensure consistency across the annual report and an explanation on page 54 that the assets are grouped according to relevant market sectors.
1
The Company has eight asset types which operate in four principal markets: (1) the tanker market; (2) the drybulk shipping market; (3) the containership market and (4) the offshore market. A market overview is presented on pages 57-59 for each of these market sectors to give the reader an understanding of economic factors driving charter rates and vessel market values.
The information presented in the table on page 47 (seven vessel types) combines the OBO carriers with drybulk carriers due to the fact that the OBO carriers are currently configured to carry drybulk cargo as noted on page 24. The discussion on page 54 concerns vessel market values which are impacted by market dynamics. Therefore, the table on page 54 is presented at summary level in the context of the market in which the vessels operate and consequently combines the oil tankers with the chemical tankers, the drybulk carriers with the OBO carriers, and the offshore supply vessels with the ultra deepwater drilling units and the jack-up drilling rig. The Company will modify the table on page 47 in future filings to consistently present eight asset types as noted on page 28 and add an explanation on page 54 that the vessels are grouped by the markets within which they operate.
2.
The table on page 54 totals $4,547 million but you only have $2,896 million of total assets at December 31, 2011. Please reconcile the aggregate carrying value of your fleet shown in the table on page 54 to the corresponding amounts in your financial statements.
The Company can reconcile the aggregate carrying value of its fleet as presented in the table on page 54 to the corresponding amounts in the financial statements as follows:
(in millions of $)
Carrying value at December 31, 2011
4,547
Less: carrying value of assets owned by wholly-owned subsidiaries accounted for under the equity method:
-SFL West Polaris Limited – West Polaris offshore drill unit
(611
)
-SFL Deepwater Limited – West Taurus and West Hercules offshore drill units
(1,240
)
Less: costs to completion of newbuildings included within the carrying value
(275
)
Less: unamortized deferred equity contribution included within investment in direct financing and sales-type leases
(164
)
Less: unamortized gains included within investment in direct financing and sales-type leases
(16
)
Aggregate balance of net vessels and equipment, newbuildings, and current and long-term portion of investment in direct financing and sales-type leases
2,241
Aggregate balance of other assets reported on the balance sheet
655
Total assets
2,896
2
Liquidity and capital resources
3.
We note that you list a number of loan agreements on page 65, and that you describe each of these loan agreements in detail on pages 67-71. In this regard, we believe your disclosure could be enhanced by first providing an overall summary of your borrowings. In this overall summary, we suggest you present separately the aggregate amounts of (i) loan facilities secured with mortgages on vessels and rigs including newbuildings, (ii) loan facilities secured with a portion of your 8.5% Senior Notes which are held as treasury notes, (iii) loan facilities secured by holdings of securities (other than your 8.5% Senior Notes), and (iv) unsecured borrowings. In addition to the amounts outstanding, please indicate the amounts undrawn and/or available for borrowing at the most recent balance sheet date.
The Company acknowledges Staff's suggestions and will in future filings, provide an overall summary of its borrowings, which will include the disclosures presented in the table below.
As of December 31, 2011
(in millions of $)
Utilized
Available
Loan facilities secured with mortgages on vessels and rigs
including new buildings
1,366.7
-
Loan facilities secured against 8.5% Senior Notes held as treasury notes
70.0
-
Loan facilities secured against investment in securities
-
11.7
Unsecured borrowings:
-8.5% Senior Notes due 2013
274.2
-
-NOK500 million senior unsecured bonds due 2014
74.6
-
-3.75% senior unsecured convertible bonds due 2016
125.0
-
1,910.5
11.7
As of December 31, 2011, $11.7 million of the $55.0 million secured securities facility was available for borrowing based on 50% of the market value of the Company's investment in marketable securities.
4.
Based on the amounts shown on your 2011 balance sheet for net vessels and equipment, newbuildings, and the current and long-term portion of investment in direct financing and sales-type leases, which amounts total $2,241 million, it appears (since this same amount is shown in Note 23 to your financial statements) that all of your vessels and rigs are pledged under mortgages. If all your vessels and rigs are pledged, please add specific disclosure to this effect in MD&A. Also, discuss how you were able to obtain additional financing (on an unsecured basis) even though all of your vessels are encumbered.
The Company notes Staff's comment and confirms that all of the Company's vessels and rigs are pledged under mortgages and that for future filings this specific disclosure will be added in MD&A.
3
The Company and its equity-accounted subsidiaries fund their acquisition of new vessels and rigs through a combination of equity and long-term debt. Providers of such long-term loan facilities usually require that the loans be secured by mortgages against the assets being acquired.
As of December 31, 2011, the Company had total outstanding indebtedness of $3.3 billion under its various credit facilities, including those of its equity-accounted subsidiaries. All of the Company's vessels and rigs including those of its equity-accounted subsidiaries have been pledged under mortgages in respect of this outstanding indebtedness.
The Company also has in place unsecured borrowings in the form of 8.5% Senior Notes due 2013, NOK500 million senior unsecured bonds due 2014 and 3.75% senior unsecured convertible bonds due 2016. In line with other companies, unsecured financing is available to the Company. Providers of unsecured financing will look at a company's assets, cash flow, net income or other factors in the context of its overall secured financing level, which affects the terms on which unsecured financing can be achieved. In general, such unsecured financing is a more expensive form of borrowing compared to borrowing with collateral, but it has been available.
Borrowings, page 67
5.
At the top of page 71, you describe a $55 million secured securities financing arrangement with a bank. In addition, we note from your financial statements that you acquired over $23 million of available for sale securities during 2011, and that you hold a long–term investment in shares which are not publicly traded. Please expand your disclosures in MD&A to discuss your investment policy and management's intentions with respect to the use of borrowings to invest in securities.
The Company notes Staff's comments and advises Staff that it will include in the MD&A for future filings, a discussion of its investment policy and management's intentions with respect to the use of borrowings to invest in securities.
Subject to the approval of the Board of Directors on a case by case basis, the Company may deploy some of its surplus funds to acquire equity or debt interests in other companies with a view to generating competitive returns.
The Company may invest in such marketable securities using its surplus funds or a combination of its surplus funds and credit facility arranged specifically for such investments. The treasury function manages the Company's debt and has a responsibility for procuring borrowing facilities for short term needs and also for long term needs, on a cost effective basis as and when required to support the Company's strategy. The $55 million secured securities financing agreement is an example of the potential to use borrowings to invest in securities to earn a commercial return, although the facility has not been utilized as at December 31, 2011. The facility may only be used to fund up to 50% of the acquisition cost of debt securities and comes with a covenant that requires a minimum value of securities to be held as collateral. The facility bears interest at LIBOR plus a margin and is secured against the relevant securities. The Company's investment policy supports the business strategy outlined in pages 28-29.
4
6.
In your description of the $700 million loan facility entered into by SFL West Polaris with a syndicate of banks, you state that such lenders have limited recourse to Ship Finance as the holding company currently only guarantees $70 million of the debt. However, on page F-18, in Note 15 to your financial statements, you state that $80 million of this debt is guaranteed at December 31, 2011. Please reconcile these disclosures.
Under the terms of the $700 million loan facility, lenders have limited recourse to Ship Finance under a reducing guarantee. The amount of the guarantee decreases as the outstanding loan amount falls as follows:
'The Guarantor's maximum liability under this Guarantee is limited to:
(a)
USD 100,000,000 as long as the Loan is equal to or exceeding USD 620,000,000;
(b)
USD 90,000,000 as long as the Loan is less than USD 620,000,000 but equal to or exceeding USD 540,000,000;
(c)
USD 80,000,000 as long as the Loan is less than USD 540,000,000 but equal to or exceeding USD 450,000,000; and
(d)
USD 70,000,000 as long as the Loan is less than USD 450,000,000.'
At December 31, 2011, the amount outstanding under this facility was $470 million. In Note 15 on page F-18, the Company has disclosed $80 million of the debt is guaranteed under this facility in line with the facility document. At the time of filing the 20-F, the amount outstanding under this facility was less than $450 million. Accordingly, the MD&A which reports the current position as at the filing date, reflects a reduced guarantee figure of $70 million in line with the facilities agreement. The Company will in future filings, expand its description of this guarantee in the MD&A to include a reconciliation of any differences arising from measurement at different dates.
Minimum Value Covenants
7.
You state that most of your loan facilities are secured with mortgages on vessels and rigs, and that you had borrowings totaling $2.4 billion with minimum value covenants. However, according to the table on page F-21, you only had $1.9 billion of total debt at December 31, 2011. Please reconcile these disclosures.
5
As noted, certain loan facilities require a minimum value covenant which requires the Company to maintain a minimum ratio between market value of pledged assets and loan outstanding. The Company's reconciliation between the $2.4 billion of borrowings with minimum value covenants and $1.9 billion of total debt at December 31, 2011 is as follows:
(in billions of $)
As of
December 31, 2011
Borrowings with minimum (vessel and rig) value covenants
2.4
Less: Borrowings of wholly-owned subsidiaries accounted for under the equity method
-SFL West Polaris Limited – West Polaris offshore drill unit
(0.5
)
-SFL Deepwater Limited – West Taurus and West Hercules offshore
drill units
(0.9
)
Add: Borrowings with no minimum (vessel or rig) value covenants
0.9
Total borrowings
1.9
The Company will in future filings, modify its description of the minimum value covenants in the MD&A to state the amount of any borrowings of its equity-accounted subsidiaries that are included.
8.
We note that you include financial statements of SFL Deepwater pursuant to Rule 3-09 of Regulation S-X. In light of the overall significance of SFL West Polaris to your business, and the fact that you guarantee $80 million of its debt at December 31, 2011, please tell us what consideration you gave to including the financial statements of SFL West Polaris in your filing. See Rule 3-13 of Regulation S-X.
In consideration of the disclosure requirements of Rule 3-09, the Company performed the Rule 1-02(w) significance test substituting 20% for 10%. The Company determined that the SFL West Polaris did not satisfy that significance test requiring the inclusion of separate financial statements. A summary of the SFL West Polaris 2011 significance test calculation is provided below:
(a) Investment test
(in thousands of $)
As of
December 31, 2011
Investment and advances to SFL West Polaris
145,000
Group consolidated total assets
2,896,128
Investment in and advances to SFL West Polaris as a % of Group consolidated total assets
5
%
6
(b) Income test
(in thousands of $)
For the year ended December 31, 2011
Net income before tax of SFL West Polaris
12,806
Group consolidated income before taxes 1
167,761
Equity in net income before taxes of investees as a % of Group net income before taxes
8
%
(1) Represents the average of the income for the last five fiscal years as the reduction in income in 2011 compared with 2010 is more than 10%.
The "asset test" in Rule 1-02(w) has been excluded in accordance with guidance in the SEC's Division of Corporation Finance Financial Reporting Manual section 2410.1.
The Company considered the filing of the SFL West Polaris financial statements under the significance test rules noted above. The Company notes the Staff's reference to Rule 3-13 of Regulation S-X and the possibility of informal written notice requiring the filing of the SFL West Polaris financial statements. The Company's view is that the disclosures in Note 15 wherein summarized financial statements of West Polaris for the current and preceding fiscal years are presented provides an accurate description of the operations, assets, liabilities and performance of the entity. The significant items on SFL West Polaris' financial statements are its drillship, loan facility and leasing arrangement with Seadrill Polaris Ltd. These items are discussed in sufficient detail under note 15, including the Company's guarantee of up to $80 million of SFL West Polaris' debt as of December 3