Good day and welcome to the Ship Finance Q1 2012 Quarter Results Presentation Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ole Hjertaker, CEO. Please go ahead, sir.

Thank you very much. And welcome, everyone, to Ship Finance International, in our first quarter conference call. And as the operator has said, my name is Ole Hjertaker, and I'm the CEO in Ship Finance Management. And with me here today, I also have our CFO, Harald Gurvin; and our 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 of Directors has declared a cash dividend of $0.39 per share. This represents $1.56 per share on an annualized basis or 11% dividend yield based on closing price yesterday. We have now declared dividends for 33 consecutive quarters and paid out $13.36 per share or more than $1 billion in aggregate dividends since 2004. The net income for the quarter was $39 million or $0.49 per share. This includes -- in the results was $2.2 million gain on sale of assets and a $2.9 million impairment on a financial investment made in a small container ship company 5 years ago. The aggregate charter revenues recorded in the quarter, including 100% owned subsidiaries accounted for as investments in associate, was $186 million. This includes the $13.6 million of cash sweep from Frontline. The EBITDA equivalent cash flow in the quarter was $154 million or $1.95 per share. We did get full cash sweep effect on 23 out of 28 vessels, representing 80% of the vessels that have chartered to Frontline, and the contribution equaled $0.17 per share in the quarter. In addition, there was also an accumulation of profit share in the quarter. The amount [ph] represented $1.4 million or $0.02 per share. But due to the $50 million prepayment of future profit share that Frontline made in December 2011, we will not recognize profit share revenues in the profit and loss statement until accumulated profit share is in excess of that amount. Net of the profit share accumulated in this quarter, the threshold is now reduced to $48.6 million. And as an illustration, the average profits paid per quarter since 2004 has been $15.5 million or $0.20 per share. Ship Finance took delivery of several newbuildings in the first quarter. This includes the 57,000 deadweight tonne Supramax SFL Humber and the 34,000 deadweight tonne Handysize vessels, vessel SFL Trent in January and the 34,000 deadweight tonne SFL Kent and the 32,000 deadweight tonne Western Australia later in the quarter. All vessels chartered to Hyundai Glovis and Hong Xiang Shipping have then been delivered, and the 2 remaining drybulk newbuildings will be delivered to Western Bulk shipping in due course. In March, we delivered the 1992-built single-hull VLCC Titan Orion to its new owner. This is the first of 3 non-double-hull VLCCs sold to an unrelated third party. And the next vessels are scheduled to be delivered in the fourth quarter this year and in the third quarter 2013. Net proceeds to Ship Finance for this vessel was $14.7 million, and we booked a gain of $2.2 million in the first quarter. In April, we announced the restructuring of the Horizon Lines' chartering deal. The vessels were built in Korea in 2006 and 2007 and had been chartered to Horizon Lines for 5 years, but the U.S. flag service that we used in was discontinued. As a U.S. domestic Jones Act container line, they could not re-deploy the vessels in the international markets without significant losses, and the vessels had therefore been in lay-up for 4 to 5 months. As part of their financial restructuring efforts, in 2011, there had been discussions on the potential termination of the charter agreement, but we could not come to economic terms that we felt were beneficial to us and our shareholders at the time. With the vessels in lay-up and the prospects of having to continue to pay the full charter higher plus lay-up costs without any revenues generating on the vessels, we had a better negotiation basis when we started up the discussions again this year and reached a deal we believe is beneficial for both Ship Finance and Horizon Lines. We received a termination compensation of $40 million in second-lien bonds plus warrants to subscribe for 10% of the company. In addition, they will pay for the reactivation of the vessels. Before lay-up, the vessels had been drydocked at an estimated expense of $800,000 to $1 million per vessel. And as part of the deal with Horizon Lines, we also took over all the fuel on board the vessels and inventories, which also had significant values. As the vessels are being charted out, we will be compensated in cash for any fuel on board the vessels. And for the first vessel alone, this represented a $500,000 value, approximately. The breakeven level on the vessels after financing and operating expenses is approximately $10,500 per day for the first 18 months, and $14,500 per day the next 5.5 years. Horizon Lines prepaid charter hire for essentially half the second quarter this year, and we are in the process of reactivating the vessels and have agreed short-term charters for 2 of the vessels already. While the charter market currently is soft, this is also reflected in the compensation package from Horizon Lines. And we believe the market balance in the segment could create some interesting opportunities. And my colleague, Magnus Valeberg, will discuss this later in this presentation. We finalized the restructuring of the agreements with Frontline in 2011, and this is the first quarter we see the economic effect of this on our profit and loss statement. Frontline paid a cash compensation of $106 million to us in December 2011, which was equivalent to nearly 2 years' reduction in base rates. We used these proceeds to prepay on bank financing and have therefore reduced breakeven rates for these vessels, which is effectively equivalent to the new reduced base rate. While we had a net contribution per share of approximately $0.10 per share per quarter from these vessels before the restructuring, the cash sweep now therefore represents effectively the net contribution going forward. Based on historic charter rates provided by Clarksons, there have been very few quarters last 15 years, as illustrated on the graph, where we wouldn't accumulate full cash sweep effect. If Frontline generates market revenues in line with the previous base rates only, the cash sweep alone may give us a positive net effect of approximately $0.20 per share per quarter or double the previous net contribution from Frontline. Actually, due to the fact that many of these vessels have subcharters at significantly higher level than the old base rates, we estimate that the cash sweep in 2012 will start accumulating from a level marginally above operating expenses for some of the vessels. The cash sweep is based on 2 separate calculations: one for 23 vessels and another for 5 VLCCs. The threshold level for the 5 VLCCs is higher than for the 23 other vessels. And depending on the market, there may be full cash sweep and profits made for the 23 vessels but no contribution on the 5 vessels. It is worth noting that the cash sweep and the profit share is based on actual performance by the vessels in the period and may therefore not be exactly comparable to rates as quoted by market analysts. The old profit share agreement had been approved from 20% to 25% and will be calculated from the old threshold level as before. As mentioned previously, $1.4 million were accumulated in the quarter, but due to the $50 million prepayment by Frontline last year, the profit share will not be recorded in the accounts until it exceeds the prepaid amounts. We have a significant portfolio of long-term charters, which is the backbone of our business and gives us a very transparent and predictable cash flow. Most of our vessels are chartered out on long-term basis, and we still have close to 11 years weighted average charter coverage. Full details on a vessel-by-vessel basis is available by contacting us on email. We have a $5.8 billion of fixed rate order backlog, which is equivalent to approximately $73 per share. And the EBITDA equivalent backlog is $4.6 billion or approximately $58 per share. These numbers are after excluding the Horizon Line charters and include only the reduced base rates from the Frontline vessels. Any expectations for cash sweep, profit share and rechartering after end of current charters are therefore excluded. Looking at the segments where this cash flow will be generated, we see that offshore is still the largest with 46% or approximately $2.7 billion of the backlog. While tankers, where the company started, now represents approximately 33% of the backlog or $1.9 billion. It is worth noting that this is not only Frontline but also include tankers chartered to other customers. Horizon Lines represented approximately 2% of our charter backlog, so after the termination of those charters, containers have been reduced to 13% of the portfolio, while drybulk now stands at 8%. We have a total of 14 customers, and more than 40% of the portfolio is the companies with a market cap in excess of $5 billion. If you include all listed companies, the percentage is 83%. In addition, a majority of the backlog in the private segment is with companies with a public rating. And, of course, if you look at counterparty risks, it's worth noting that they own the asset and they all have an alternative market, so the effective counterparty risk, in theory, should be limited to the excess charter hire, if any, above current market for the corresponding charter period. And the rest is effectively covered by this deal. If you look at the average weighted charter tenure [ph], as indicated on the right side, we see that we have more than 70% of the portfolio in excess of 10 years and only 3% shorter than 5 years. If you look at normalized contribution from our projects, including vessels accounted for as investment in associates, the EBITDA, here defined as charter hire plus profit share -- sorry, before cash sweep less OpEx and general and administrative expenses, was $658 million last 12 months. This is equivalent to approximately $8.30 per share. Net interest was $142 million or approximately $1.80 per share in the corresponding period. But more importantly, for normalized ordinary debt installments relating to the company's projects was $380 million or nearly $5 per share. This is excluding the prepayments relating to the Frontline vessels in 2011. We had approximately $3.2 billion on net interest-bearing debt at quarter end, and we continue our scheduled steep loan amortization. The amortization represents around 8-year profile to 0, and this compares to our weighted average age of the vessels or approximately 5 years. The net contribution from our projects last 12 months after this aggressive debt repayment profile was $145 million or $1.83 per share. This compares to the $1.47 in dividends declared for the corresponding period. And if you look at the longer period over the last 8 years, aggregate net income has been nearly $20 per share, while aggregate dividends have been $13.36 per share, illustrating the conservative profile of the company. And with that, I will leave the word over to Mr. Harald Gurvin, our Chief Financial Officer, who will take us through the numbers for the first quarter.

Thank you, Ole. On this slide, we have shown our pro forma illustration of cash flows for the first quarter of 2012 compared to the fourth quarter of 2011. Please note that this is only a guideline to assess the company's performance and is not in accordance with U.S. GAAP. For the first quarter of 2012, total charter revenues were $172.8 million or $2.18 per share, compared to $192.9 million or $2.44 per share in the fourth quarter of 2011. On the VLCCs and the Suezmaxes, the reduced charter revenues are due to the temporary reduction in the base charter rate of $6,500 per day for each of the vessels on charter to Frontline. While for the chemical tankers and container vessels, revenues were in line with the previous quarter. The drybulk vessels achieved revenues of $16.9 million in the first quarter compared to $17 million in the previous quarter. Despite the rate reduction of $6,500 per day for each of the 5 remaining OBOs on charter to Frontline and the sale of 1 OBO in the fourth quarter of 2011, drybulk revenues were fairly stable due to the delivery of 4 newbuildings during the quarter. On the offshore side, charter hire came in at $92.2 million compared to $98.9 million in the fourth quarter of 2011. The reduction is due to a scheduled step-down in the charter rates for the ultra-deepwater drilling rate in West Hercules, which is on a long-term payable charter to Seadrill. It is important to note that the rate reduction is balanced by reduced interest and debt repayments on the related financing, so that the net cash flow for Ship Finance going forward will more or less be unchanged. As mentioned previously, we also generated a cash sweep from Frontline of $13.6 million, which reflects the full cash sweep on 23 of the 28 vessels. Our profit share of $1.4 million also accumulated in the first quarter, but that this is netted against the $50 million of profit share prepaid by Frontline. The number is not included in the table above. Vessel operating expenses showed a slight increase compared to the fourth quarter. This is due to the delivery of the 4 drybulk vessels during the first quarter, which are all employed on the time charters. So overall, this summarizes to an EBITDA of $154.1 million for the quarter or $1.95 per share. The reduction compared to the previous quarter is mainly due to the reduced rate on West Hercules, which as mentioned is balanced by reduced debt service on the related financing. We then move on to the loss and profit statement as reported on the U.S. GAAP. As we have described in previous earnings calls, our accounting statements are slightly different than those of a traditional shipping company. As our business strategy focuses on long-term charter contracts, a large part of our activities are classified as capital leasing. As a result, a significant portion of our charter revenues are excluded from our booked operating revenues and instead booked as revenues classified as repayment of investment in finance leases, results in associates and long-term investments and interest income from associates. If you wish to gain more understanding of our accounts, we have, also this quarter, published a separate webcast, which explains the finance lease accounting and investments in associates in more detail. This webcast can be viewed on our website, shipfinance.org. Overall for the quarter, we reported total operating revenues according to U.S. GAAP of $84 million. Charter revenues from operating leases were up approximately $3 million compared to the previous quarter, mainly due to the delivery of the 4 newbuilding drybulk vessels. The reduction in charter revenues from finance leases is due to the reduced rates on the Frontline vessels. Further, the nonrefundable cash compensation of $106 million for Frontline was booked after revenue in the fourth quarter of 2011 with a corresponding repayment of investment in finance lease for the same amount. Hence, the revenue figure for the fourth quarter was $106 million higher than scheduled but has no effect on operating income. Our profit share of $1.4 million accumulated in the first quarter, which has been settled against the $50 million profit share prepaid by Frontline, giving a 0 net effect in the income statement. The cash sweep income from Frontline was $13.6 million, and we also booked a gain of $2.2 million on the sale of the single-hull VLCC Titan Orion in the first quarter. Interest expenses in the quarter were down $1.6 million compared to previous quarter, mainly due to the substantial reduction in debt relating to the Frontline vessels at the end of fourth quarter 2011. We also made a $2.9 million impairment linked to the financial investment in a container owner and operator. The investment was made 5 years ago. And the original investment of $10 million has previously been written down to $2.9 million. We are now taking an impairment on the balance of that investment to be conservative. The number of common shares outstanding increased by 100,000 shares during the quarter, following the exercise of options by employees. So overall, and according to U.S. GAAP, the company reported net income of $39 million or $0.49 per share for the quarter, up from $30 million in the previous quarter. Moving on to the balance sheet. We showed $112 million of cash at the end of the quarter. In addition, we have invested $24 million in short-term tradable securities as a short-term liquidity placement. Amount due from related parties includes the $13.6 million cash sweep accumulated during the first quarter. The final cash sweep is calculated on an annual basis and payable in March the following year. Further, looking at vessels and equipment, the balance has increased due to delivery of 4 vessels during the first quarter, while newbuildings and vessel deposits have decreased following the deliveries. Under other long-term assets, this includes the $50 million investment in the 2 CMA CGM container vessels, so this transaction is structured as a loan and we have a mortgage securing our investment. Stockholder's equity stands at just over $1 billion, including the $161.8 million of deferred equity. The book equity ratio, including deferred equity, was 33.8% at the end of this quarter. Then looking at our liquidity and financing status. As mentioned, the company had cash of $112 million at the end of the quarter, which excludes the $24 million of liquid securities we hold as a short-term liquidity placement. On the debt side, we had $3.3 billion of total long-term debt outstanding at the end of the quarter, of which $1.9 billion is consolidated long-term debt and approximately $1.4 billion is long-term debt in our subsidiaries accounted for as investments in associates. This figure includes the unsecured NOK bonds maturing in 2014, of which $77 million is net outstanding, the $125 million of convertible bonds maturing in 2016 and the $274 million net outstanding of senior notes maturing in December 2013. The convertible bonds can be repaid in shares in the company's option at maturity. We have arranged for long-term finance for all vessels under construction, with remaining total commitments of up to $220 million. The leverage is in excess of 75% of the contract price for each vessel, with maturities between 10 and 12 years. We also have limited refinancing needs in the next 12 months. On upcoming debt maturities, the financing is relating to the 3 ultra-deepwater units acquired from Seadrill in 2008, mature during the second half of 2013. The financings were for an original amount -- total amount of $2.1 billion, but, restructured with a very frontloader repayment structure, and we have already repaid close to $800 million on these facilities alone, and we continue to pay down significant amounts before maturity. The rigs will have 10 years left on the charters at Seadrill at the time of maturity and are structured with put [ph] options or purchase obligations at the expiry of the charters, taking away the residual risk for us. Although we have repaid substantial amounts of the debt, values have remained relatively stable and the outlook for the offshore market is strong. The 8.5 senior notes mature in December 2013. The original amount of the senior notes was $580 million, but the current debt outstanding is only $274 million or less than half of the original amount. Our total unsecured debt now only stands at around 50% of our total debt. The senior notes can be called at par at any time, and there's still more than 1.5 years left until maturity. We will address this in due course. And given the relatively small amount to be refinanced, we are very confident that the senior notes can be refinanced at attractive terms. The next slide provides a more detail on our newbuilding program and the remaining payments to the shipyards. Following the delivery of 4 drybulk vessels in the first quarter of 2012, we have 2 remaining drybulk vessels under construction with expected delivery in the third and fourth quarter of 2012, plus 4 container vessels scheduled for delivery in 2013. The graph shows the committed financing in the blue bars compared to the remaining shipyard installments in the yellow bars. For the second quarter of 2012, we have scheduled yard installments of $16 million. While we may grow up to $39 million on committed financing, giving a potential positive cash effect of $23 million for the quarter. The reason the potential drawdowns are higher than the scheduled installments is that we have already paid in significant amounts in cash to the yards. For the third and fourth quarters, the yard installments and committed financing are at approximately equal levels. For 2013, the scheduled yard payments total $172 million, while we can draw $138 million of related financing, resulting in a net cash investment of $34 million in that year. If you look at the period overall, from now until the end of December 2013, the overall net cash investment compared to the available financing is only $13 million. We are in compliance with all financial covenants under our loan agreement. Free cash was $112 million compared to the minimum requirement of $25 million. Working capital was $185 million compared to the requirement of being positive. And the book equity ratio was 34% compared to minimum requirement of 20%. And on the loan agreements, where we have a minimum value covenants, we were fully in compliance at the end of the quarter. It is worth noting that Ship Finance has been in compliance with all financial covenants for each of the 33 quarters since the company was established. Given the financial turmoil and depressed shipping markets of the last year, this gives us a very strong standing in the banking markets. On that note, I will hand the word over to Senior Vice President, Mr. Magnus Valeberg, who will talk about the container market.

Thank you, Harald. Even though the short-term charter market is currently soft, we believe that the prospects for the feeder and containing shipping market is promising. The graph in the top left corner shows the fleet profile of the 2,000 to 3,000 teu feeder vessels. The current order book for these vessels is below 5% of the current fleet. And more than 25% of the vessels are older than 15 years. According to industry sources, the number of vessels scrapped so far in 2012 has already surpassed the number of vessels scrapped last year, and the scrapping activity is expected to remain high for the rest of the year. Therefore, we do not expect a net increase in the feeder vessel fleet in the next few years. As you may see on the graph on the top right corner, the overall order book in the container shipping market is very skewed toward the largest vessels. The fleet growth is, to a large extent, driven by the large post-Panamax vessels from 5,000 teu and upwards. The charter market for these vessels are more based on long-term charters, and the feeder container market is, to a lesser extent, impacted by the largest vessels. The container liner companies normally have a fleet of vessels that they own themselves and vessels chartered in from tonnage providers. Historically, the German KG market and the Japanese owners have been very significant tonnage providers to the container liners. As you may see from the graph down on the left side, from 2000 until 2009, German owners alone represented between 40% and 50% of the total investments in container vessels. However, after the financial crisis that started in 2008, this market has experienced significant challenges, and we do not expect that the German KG market will return to previous levels. We believe that these structural changes represent a good opportunity for a more balanced market going forward. The last graph shows the historical short-term time charter rates for 2,800 teu vessels. As you may see, the current rate environment is well below the historical average, which has been about $20,000 per day. And it's currently close to the bottom seen in 2009. Ship Finance has a modern fleet of 15 container vessels, ranging from feeder-size vessels of 1,700 teu to very large vessels with nominal capacity of up to 13,800 teu. 8 of the vessels, including the 4 newbuildings, have been fixed out on long-term charters in accordance with SFL's main chartering strategy. Seven of the feeder container vessels are currently spot or trading on short-term time charters. The daily charter rates on these vessels are currently well below our long-term expectations. And we will continue to trade these vessels in the short term market to be positioned for a rebound in charter rates. Given the changed profile of our container business, we are evaluating structural alternatives to maximize the value of this business. One of the alternatives we are considering is to carve out the container business in a separate entity. And to summarize for the first quarter. The Board of Directors declared a cash dividend of $0.30 per share, which represented dividend yield of 11.3%, based on yesterday's closing price. Quarterly net income was $39 million or $0.49 per share. And the company generated an EBITDA of $154 million or $1.95 per share. The spot tanker market has so far in 2012 been stronger than expected when we entered into the restructuring with Frontline. And thus, SFL has experienced a strong contribution from the vessels chartered to Frontline. In the first quarter, the cash sweep amount has been higher than the net contribution prior to the restructuring. We expect a significant contribution in the second quarter as well. Our newbuilding program is progressing according to schedule in this quarter we took delivery of 4 additional drybulk vessels. All vessels are chartered out and contributed positively to the results in the first quarter. As I mentioned on the previous slide, we are currently evaluating different alternatives to maximize the value of our container investments and will inform the market when this develops further. This concludes this presentation. And with that, I give the word back to the operator, who will open up the line for questions.

[Operator Instructions] Our first question will come from David Misel [ph].

My question concerns the cash sweep. Is the money kept in a segregated account? Does it come to you? What happens if in quarters, the -- there is no cash sweep or there's a problem with Frontline? Can they claw the money back or is it a cumulative cash sweep? How does that -- what are the actual particulars to how that works?

Yes. Hi, this is Ole Hjertaker. The way it works is that it is calculated every quarter, but it's -- the final -- it's always on a year-to-date basis, with the final calculation at the end of December. So that means that the first quarter, we have just announced. When we get to the second quarter, it will be year-to-date in June minus what had been accounted for in the first quarter and so forth.

So in other words, if there is an issue with Frontline at the end of the year, that whole cash sweep could disappear?

It could disappear in -- yes, in theory at least. But we are relatively confident on the ability to generate cash sweep based on 2 things. First of all, the cash sweep kicks in at the very low charter rate for many of the vessels. As illustrated on one of the slides, for 23 of the vessels, the cash sweep actually starts at just a little over effective -- call it technical management or operating expenses for the vessels. And also, Frontline, they have subchartered many of these vessels at a higher rate. Frontline is reporting their numbers tomorrow. So we don't have access to sort of the details, but they have, in previous quarters, indicated that they have charters, for instance, on some of the OBO vessels, oil-bulk-ore vessels, at significantly higher rates than the base rates. So that will, of course, give a positive contribution irrespective of where this book market is going.

Now from an actual cash standard, going forward, I was a little confused for 2013, you're actually fronting the -- you're paying Frontline's portion of it in anticipation of getting it back at the end of the year, if you went forward to 2013, correct, [indiscernible]?

Yes, you can have [indiscernible] we received $106 million from Frontline in December, which was, in a way, you could say 2 years front-paying of [indiscernible].

[Operator Instructions] Our next question now is from Rasta Behrang from Jefferies.

Just a follow-up on the potential carve-out of your container ships. If that happens, would you include your container ships that have long-term contracts? Or is it only going to include container ships with short-term contracts?

Well, that has not been determined yet. We were indicating in the press release, in the presentation that this is something that we are evaluating now as we have the 7 vessels effectively in the short-term market. So I think that all depends on the specific situation and how we see -- call it more value for the Ship Finance shareholders in the structure. So more details on that -- we will, of course, have to come back to when we have done some more work on this and call it that project has to progress somewhat more. But I think from a structural perspective, the container vessels that are operating in the short-term market is, of course, a little bit on the side of the core business of Ship Finance, which is the long-term charters. So those are, of course, the most natural vessels to focus on. But if that should also include some of the other vessels, it could be, but we have to get back to it.

Okay. And the 2 container ships that you just fixed in the market with short-term contracts, what is the rate on those vessels?

Well, the market rate currently, as indicated by brokers, is in the range of $6,500 to $7,500 per day. We don't give exact details on all charter rates per vessels, but that is -- they are fixed, basically. It's a relatively liquid market and they are fixed at market. And that is also, of course, the reason why we go short term is that we believe that the market rates will improve and will firm up. And therefore, we're trying to charter these out on short-term as we can and hopefully catching that upturn in the market.

We will now take a question from C.J. Baldoni from Principal Global Investors. C.J. Baldoni: I have 2 questions. It's a follow-up on the last one. And I understand that it's early, but would you envision that whatever form, such a spinoff may take -- would involve cash coming to the company or would it just be shares?

Well, that is too early to determine. So it all depends on the structure we would end up with. Whether it spin off as a separate, call it, listed or OTC-traded company or if it stays more as a, you can say, as a private equity-type setup with us as a significant investor. And it, of course, it also depends a lot on what kind of plans you make for that company, in terms of the future growth and how to build that business, going from the starting block, which of course is the vessels that we have there on the water tank. C.J. Baldoni: Okay. So you don't have any minimum requirement going into this that it would need to be cash accretive?

No. I mean, the -- our principal objective is to try to maximize the value for the Ship Finance shareholders. So if that is by injecting some more cash into it, in terms -- to get more growth and create more upside potential and thereby getting a better valuation, that could be one way to get to that goal. But in the end, it's -- you have to evaluate the different factors against each other. And hopefully, it will create an interesting opportunity, which is more tailored to call it a shorter-term charter angle than compared to our sort of base model, which is long-term charters. C.J. Baldoni: Okay. And then lastly, has there been any indication regarding the purchase option for the West Polaris that comes up? I think it's later this year, in August. And if not, when will you get indication if that's going to be exercised?

Yes. The purchase option is in October. And I believe they have to give us notice to exercise it in mid-August, approximately. So I think when we report the second quarter, we would probably have better information on whether or not they have told us that they will exercise that option. I think I would mention 2 things. First, they had a purchase option for a ultra-deepwater drilling unit last year that they did not exercise. And we also note that Seadrill has ordered quite a few vessels and have a fairly, fairly sizeable backlog of newbuildings that will come onstream, and -- which I'm also sure they have some plans for to source the capital in an efficient way. But we will just have to wait and see, and it's in their option. If they do exercise such option, of course, we will get a lot of cash in our hands. So then it's more a question of how can we, if that happens, redeploy that cash at a good rate and do we get as good or maybe better, call it, risk-adjusted return on those investments. C.J. Baldoni: And at this point, it would be too early to say how that would redeploy -- be deployed? It would just depend on the market opportunities at that time, I would suspect.

Exactly. Exactly. I don't think -- and that's also a principle we're working after. I mean, we focus on trying to do the right deals. And therefore, we never communicate how much we're going to invest in any specific segment within any specific timing. So -- and if we see the right type of investments, we focus on that and execute when we feel that it is right.

Gentleman, our next question now from Justine Fisher from Goldman Sachs.

I just have one question, a follow-up on the spinoff of the container business. So -- and I think probably C.J.'s question answered it. I was going to ask why, if the prospects were so good for the business, Ship Finance would want to spin the business off. And it seemed as though you'd mentioned that the charter structure doesn't match Ship Finance's charter -- preferred charter structure, so the containers are on short-term charters and you prefer long-term charters, so that may be strategic reason to spin off the business. But is -- so, a, is that correct? And then b, does that imply that the short -- the smaller container ship market will continue to remain a short-term market? I mean, I think that people look at some shipping end markets and say eventually when the markets improve, people will be more willing to enter into longer-term charters as a sign of that improvement. So do you expect the smaller container ship markets to remain a short-term market?

Yes. I mean, to start with the last part, what we've seen over time in the container space is that the container lines, when they -- over time, you could say that the balance has been that container lines made sort of 50% of call it newbuildings that have been made by the container lines and operators themselves and 50% made by call it tonnage providers like Ship Finance, who supply the lines, container lines, with assets. Typically, they tend to own the very big vessels themselves relatively more than smaller vessels. And as the smaller vessels are -- the more smaller vessels in the market, there is more of a short-term market for the container lines to sort of have them in on shorter-term charters. And you also have more lines, so from an ownership perspective, you are not so exposed by owning those kind of assets because you know that there are many charters you can charter them out to. So the trend has typically been that for smaller container ships, you see generally more activity in the shorter-term charter market, while for the big, very big container ships, you typically see longer, more financial-type deals to sort of take care of those -- the dynamic in that market. For Ship Finance, where we have, of course, a $5.8 billion charter backlog, our investors, I'm sure, look at the charter backlog when they assess quality of the company. These vessels with shorter-term charters are a little bit different. And you could, at least in theory, think that some investors would be -- may be more interested in investing in a company with a more spot, call it, profile and thereby would catch sort of upside volatility in the shorter-term charter market as opposed to taking long term, more fixed, predictable revenues. So from our side, this is now when we have 7 vessels effectively, call it trading in the short-term market, it's an opportunity for us to explore if we can generate more value for our shareholders by spinning this off into a separate entity instead of keeping it under the Ship Finance umbrella.

Okay. But the CMA CGM ships, those are -- would those go with the container -- the other container vessels as well?

Well, that is a bit premature. I think the backbone to sort of determine -- I mean, the backbone of our focus here has been how can we get the vessels that are being traded in the relatively shorter-term market, how can we sort of generate more value around that. And whether we limit to that or we also include some of the other container ships, we also have effectively 8 other vessels, 4 vessels to be delivered. We have 2 CMA CGM big container ships and also 2, 1,700 teu container ships on longer-term charters. That remains to be seen. And it's all, of course, also an evaluation of where do we get more value out of it, by keeping it in Ship Finance or keeping it at this setup.

Okay. And then the last question is just on the terms of the Horizon Line bonds at $40 million. Can you give us a little bit more detail on that? I know some people involved with the Horizon restructuring more may know the details, but I'm not -- I don't know all the details of those notes.

Yes, the notes are there, second-lien notes, and they are a part of -- or they were an extension of a note that was issued in October last year. So they have maturity in October 2016. The second-lien notes was $100 million and then was extended to $140 million with our notes.

Are you getting interest on those?

Yes. I mean, we get -- the company, Horizon Lines, can choose between a cash interest of 13%. They can choose a 50-50 cash and payment-in-kind of 14% or 15% if paid in kind. And they have to tell us semiannually in advance what they choose. And for the next period until October, they have chosen payment-in-kind, where we will then get 15% in newly issued bonds. These bonds are then junior to $225 million of first-lien notes, and this is with lien over effectively all of Horizon Line's assets.

[Operator Instructions] As there are no further questions, that will conclude today's Q&A session. I would now like to turn the call back to Mr. Hjertaker for any additional or closing remarks.

Thank you. Then I would like to thank everyone for participating in our first quarter conference call and wish everyone a nice day.

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