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VARIABLE INTEREST ENTITIES ("VIE") | 12 Months Ended
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Dec. 31, 2019
VARIABLE INTEREST ENTITIES [Abstract] |
VARIABLE INTEREST ENTITIES (VIE) |
5. | VARIABLE INTEREST ENTITIES ("VIEs")
5.1 | Lessor VIEs
As of December 31, 2019, we leased eight vessels (December 31, 2018: eight vessels) from VIEs as part of sale and leaseback agreements, of which four were with ICBC Finance Leasing Co. Ltd ("ICBCL") entities, one with a China Merchants Bank Co. Ltd ("CMBL") entity, one with a CCB Financial Leasing Corporation Limited ("CCBFL") entity, one with a COSCO Shipping entity and one with a China State Shipbuilding Corporation entity ("CSSC") entity. Each of the ICBCL, CMBL, CCBFL, COSCO Shipping and CSSC entities are wholly-owned, newly formed special purpose vehicles ("Lessor SPVs"). In each of these transactions, we sold our vessel and then subsequently leased back the vessel on a bareboat charter for a term of ten years. We have options to repurchase each vessel at fixed predetermined amounts during their respective charter periods and an obligation to repurchase each vessel at the end of the 10 year lease period. While we do not hold any equity investments in the above SPVs, we have determined that we have a variable interest in these SPVs and that these lessor entities, that own the vessels, are VIEs. Based on our evaluation of the agreements, we have concluded that we are the primary beneficiary of these VIEs and, accordingly, these lessor VIEs are consolidated into our financial results. We did not record any gains or losses from the sale of these vessels as they continued to be reported as vessels at their original costs in our consolidated financial statements at the time of each transaction. Similarly, the effect of the bareboat charter arrangement is eliminated upon consolidation of the lessor SPV. The equity attributable to the respective lessor VIEs are included in non-controlling interests in our consolidated financial statements. As of December 31, 2019 and 2018, the respective vessels are reported under "Vessels and equipment, net" in our consolidated balance sheets. The following table gives a summary of the sale and leaseback arrangements, including repurchase options and obligations as of December 31, 2019:
Vessel | Effective from | Lessor | Sales value (in $ millions) | Lease duration | First repurchase option (in $ millions) | Date of first repurchase option | Net repurchase obligation at end of lease term (in $ millions) | End of lease term
Golar Glacier | October 2014 | ICBCL | 204.0 | 10 years | 173.8 | October 2019 (1) | 116.7 | October 2024
Golar Kelvin | January 2015 | ICBCL | 204.0 | 10 years | 173.8 | January 2020 (1) | 116.7 | January 2025
Golar Snow | January 2015 | ICBCL | 204.0 | 10 years | 173.8 | January 2020 (1) | 116.7 | January 2025
Golar Ice | February 2015 | ICBCL | 204.0 | 10 years | 173.8 | February 2020 (1) | 116.7 | February 2025
Golar Tundra | November 2015 | CMBL | 254.6 | 10 years | 168.7 | November 2018 (1) | 51.3 | November 2025
Golar Seal | March 2016 | CCBFL | 203.0 | 10 years | 132.8 | March 2018(1) | 63.4 | March 2026
Golar Crystal | March 2017 | COSCO | 187.0 | 10 years | 97.3 | March 2020 (1) | 50.0 | March 2027
Hilli | June 2018 | CSSC | 1,200.0 | 10 years | 633.2 | June 2023 | 300.0 | June 2028
(1) We did not exercise the first repurchase option. A summary of our payment obligations (excluding repurchase options and obligations) under the bareboat charters with the lessor VIEs as of December 31, 2019, are shown below:
(in thousands of $) | 2020 | 2021 | 2022 | 2023 | 2024 | 2025+
Golar Glacier | 17,147 | 17,100 | 17,100 | 17,100 | 12,884 | —
Golar Kelvin | 17,147 | 17,100 | 17,100 | 17,100 | 15,695 | —
Golar Snow | 17,147 | 17,100 | 17,100 | 17,100 | 15,695 | —
Golar Ice | 17,147 | 17,100 | 17,100 | 17,100 | 17,147 | 1,452
Golar Tundra (1) | 19,808 | 18,963 | 18,150 | 17,348 | 16,566 | 13,199
Golar Seal | 13,717 | 13,717 | 13,717 | 13,754 | 13,717 | 13,717
Golar Crystal (1) | 11,058 | 10,979 | 10,935 | 10,877 | 10,827 | 24,067
Hilli (1) | 112,959 | 109,101 | 105,244 | 101,479 | 97,528 | 290,361
(1) The payment obligations relating to the Golar Tundra, Golar Crystal and Hilli above includes variable rental payments due under the lease based on assumed LIBOR plus a margin. The assets and liabilities of the lessor VIEs that most significantly impact our consolidated balance sheets as of December 31, 2019 and 2018, are as follows:
(in thousands of $) | Golar Glacier | Golar Kelvin | Golar Snow | Golar Ice | Golar Tundra | Golar Seal | Golar Crystal | Hilli | 2019 | 2018
Assets |  |  |  |  |  |  |  |  | Total | Total
Restricted cash and short-term deposits (see note 12) | 28 |  | 1,481 |  | 1,481 |  | 1,471 |  | — |  | 3,470 |  | 4,881 |  | 22,135 |  | 34,947 |  | 176,428 |
Liabilities |  |  |  |  |  |  |  |  |  |
Debt: |  |  |  |  |  |  |  |  |  |
Current portion of long-term debt and short-term debt (1) | 127,166 |  | 147,025 |  | 127,695 |  | 100,799 |  | 10,764 |  | — |  | 6,625 |  | 442,931 |  | 963,005 |  | 646,513 |
Long-term interest bearing debt - non-current portion (1) | — |  | — |  | — |  | — |  | 94,120 |  | 100,359 |  | 84,145 |  | 338,500 |  | 617,124 |  | 1,200,774 |
| 127,166 |  | 147,025 |  | 127,695 |  | 100,799 |  | 104,884 |  | 100,359 |  | 90,770 |  | 781,431 |  | 1,580,129 |  | 1,847,287 |
(1) Where applicable, these balances are net of deferred finance charges (see note 18). The most significant impact of the lessor VIE's operations on our consolidated statements of income and consolidated statements of cash flows, for the years ended December 31, 2019, 2018 and 2017 are as follows:
(in thousands of $) | 2019 | 2018 | 2017
Statement of income |  |  |
Interest expense | 69,373 |  | 61,502 |  | 37,383 |
Statement of cash flows |  |  |
Net debt repayments | (410,737) |  | (299,776) |  | (60,549) |
Net debt receipts | 144,278 |  | 1,061,000 |  | 112,000 |
5.2 | Golar Hilli LLC
In 2018, we and affiliates of Keppel Shipyard Limited ("Keppel") and Black & Veatch Corporation ("B&V") (together, the "Sellers"), completed the sale ("Hilli Disposal") to Golar Partners of common units (the "Hilli Common Units") in our consolidated subsidiary Golar Hilli LLC ("Hilli LLC"), which owns Golar Hilli Corp. ("Hilli Corp"), the disponent owner of the Hilli for $658 million, less 50% of our net lease obligations. The Hilli Disposal resulted in the following changes to our ownership interest in our consolidated subsidiary Hilli LLC in our equity:
(in thousands of $) | December 31, 2018 |
Net loss attributable to stockholders of Golar LNG Limited | (231,428) |  |
Transfer to the non-controlling interests: increase in Golar LNG Limited’s paid-in capital for sale of 1096 Hilli Common Units in July 2018 | 304,468 |  |
Changes from net income attributable to stockholders of Golar LNG Limited and transfers to non-controlling interests | 73,040 |  |
Concurrent with the closing of the Hilli Disposal, we entered into the Amended and Restated Limited Liability Company Agreement of Hilli LLC (the "LLC Agreement") on July 12, 2018. The ownership interests in Hilli LLC are represented by three classes of units: the Hilli Common Units, the Series A Special Units and the Series B Special Units. After the Hilli Disposal, the ownership structure of Hilli LLC is as follows:
| Percentage ownership interest |  |
| Common Units | Series A Special Units | Series B Special Units
Golar LNG Limited | 44.6 | % | 89.1 | % | 89.1 | %
Golar Partners | 50.0 | % | — | % | — | %
Keppel | 5.0 | % | 10.0 | % | 10.0 | %
B&V | 0.4 | % | 0.9 | % | 0.9 | %
We are the managing member of Hilli LLC and are responsible for all operational, management and administrative decisions relating to Hilli LLC’s business. We have retained sole control over the most significant activities and the greatest exposure to variability in residual returns and expected losses from the Hilli and, as a result, management has concluded that Hilli LLC is a VIE and that we are the primary beneficiary. As such, we continue to consolidate both Hilli LLC and Hilli Corp. All three classes of ownership interests in Hilli LLC have certain participating and protective rights. We reflect Keppel and B&V’s ownership in Hilli LLC’s Series A Special Units and Series B Special Units as non-controlling interests in our financial statements. The LLC Agreement provides that within 60 days after the end of each quarter (commencing with the quarter ending September 30, 2018), we, in our capacity as the managing member of Hilli LLC, shall determine the amount of Hilli LLC’s available cash and appropriate reserves (including cash reserves for future maintenance capital expenditures, working capital and other matters), and Hilli LLC shall make a distribution to the unitholders of Hilli LLC (the "Hilli Unitholders") of the available cash, subject to such reserves. Hilli LLC shall make distributions to the Hilli Unitholders when, as and if declared by us; provided, however, that no distributions may be made on the Hilli Common Units on any distribution date unless Series A Distributions (defined below) and Series B Distributions (defined below) for the most recently ended quarter and any accumulated Series A Distributions and Series B Distributions in arrears for any past quarter have been or contemporaneously are being paid or provided for. Series A Special Units: The Series A Special Units rank senior to the Hilli Common Units and on par with the Series B Special Units. Upon termination of the LTA, Hilli LLC has a right to redeem the Series A Special Units from legally available funds at a redemption price of $1 (per Series A Special Unit) plus any unpaid distributions. There are no conversion features on the Series A Special Units. "Series A Distributions" reflect all incremental cash receipts by Hilli Corp during such quarter when Brent Crude prices rise above $60 per barrel with contractually defined adjustments. Series B Special Units: The Series B Special Units rank senior to the Hilli Common Units and on par with the Series A Special Units. There are no conversion or redemption features on the Series B Special Units. Incremental returns generated from future vessel expansion capacity (currently uncontracted and excluding the exercise of additional capacity under the existing LTA) include cash receipts and contractually defined adjustments. Of such vessel expansion capacity distributions ("Series B Distributions"): •holders of Series B Special Units are entitled to 95% of these distributions, and •holders of Hilli Common Units are entitled to 5% of these distributions. Hilli Common Units: Distributions attributable to Hilli Common Unitholders are not declared until any accumulated Series A Special Units and Series B Special Units distributions have been paid. As discussed above, Hilli Common Unitholders are entitled to receive a pro rata share of 5% of the vessel expansion capacity distributions. Impact of partial disposal: Hilli LLC is an entity where the economic results are allocated based on the LLC Agreement rather than relative ownership percentages. This is due to the different classes of equity within the Hilli LLC entity, as discussed above (Hilli Common Units, Series A Special Units, Series B Special Units). As the LLC Agreement is a substantive contractual arrangement that specifies the allocation of cash proceeds, management has allocated the results of the Hilli LLC entity based on this. The main assumption made in the above exercise was to make certain assumptions about the allocation of non-cash components. Specifically, the unrealized mark-to-market movement in the oil derivative instrument is allocated to the Series A Special Unit holders only as they are the only unit holders who benefit from the oil-linked revenues, and the cost of the Hilli asset is allocated between the Hilli Common Unit holders and the Series B Special Unit holders. This split follows the allocation of cash revenues associated with the capacity of the asset to the Hilli Common Unit holders and the Series B Special Unit holders. Summarized financial information of Hilli LLC The assets and liabilities of Hilli LLC(1) that most significantly impacted our consolidated balance sheet as of December 31, 2019 and 2018, are as follows:
(in thousands of $) | 2019 | 2018
Balance sheet |  |
Current assets | 64,507 |  | 172,554 |
Non-current assets | 1,300,065 |  | 1,392,710 |
Current liabilities | (496,029) |  | (278,728) |
Non-current liabilities | (418,578) |  | (842,786) |
(1) As Hilli LLC is the primary beneficiary of the Hilli Lessor VIE (see above) the Hilli LLC balances include the Hilli Lessor VIE. The most significant impacts of Hilli LLC VIE's operations on our consolidated statements of income and consolidated statements of cash flows, as of December 31, 2019 and 2018, are as follows:
(in thousands of $) | 2019 | 2018
Statement of income |  |
Liquefaction services revenue | 218,096 |  | 127,625 |
Realized and unrealized (losses)/gains on the oil derivative instrument | (26,001) |  | 16,767 |
Statement of cash flows |  |
Net debt repayments | (243,513) |  | (30,300) |
Net debt receipts | 129,454 |  | — |
5.3 | Gimi MS Corporation
In April 2019, Gimi MS Corporation ("Gimi MS") entered into a Subscription Agreement with First FLNG Holdings Pte. Ltd. ("First FLNG Holdings"), an indirect wholly-owned subsidiary of Keppel Capital, in respect to First FLNG Holdings' participation in a 30% share of FLNG Gimi. Gimi MS will construct, own and operate FLNG Gimi and First FLNG Holdings subscribed for 30% of the total issued ordinary share capital of Gimi MS for a subscription price equivalent to 30% of the project cost. Under the Subscription Agreement, Gimi MS may call for cash from the shareholders for any future funding requirements and shareholders are required to contribute to such cash calls up to a defined cash call contribution. As of December 31, 2019, the initial subscription and subsequent cash calls amounted to $105.3 million. Concurrent with the closing of the sale of the common units, we have determined that (i) Gimi MS is a VIE, (ii) we are the primary beneficiary and retain sole control over the most significant activities and the greatest exposure to variability in residual returns and expected losses from the Gimi. Thus Gimi MS continues to be consolidated into our financial statements. Summarized financial information of Gimi MS The assets and liabilities of Gimi MS that most significantly impacted our consolidated balance sheet as of December 31, 2019 are as follows:
(in thousands of $) | Notes | 2019
Balance sheet |  |
Current assets |  | 24,894 |
Non-current assets | 15 | 434,248 |
Current liabilities |  | (9,697) |
Non-current liabilities |  | (107,902) |
The most significant impacts of Gimi MS VIE's operations on our consolidated statement of cash flows, as of December 31, 2019 are as follows:
(in thousands of $) | 2019
Statement of cash flows |
Additions to asset under development | 383,200 |
Net debt receipts | 130,000 |

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- Definition The entire disclosure for a variable interest entity (VIE), including but not limited to, judgments and assumptions in determining whether to consolidate and in identifying the primary beneficiary, gain (loss) recognized on the initial consolidation of the VIE, terms of arrangements, amounts and classification of the VIE's assets and liabilities, and the entity's maximum exposure to loss. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -URI http://asc.fasb.org/topic&trid=2197479 + Details
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