Variable Interest Entities ("VIE")

9 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

VARIABLE INTEREST ENTITIES ("VIE")

9.1 Lessor VIEs

As of September 30, 2020, we leased ten (December 31, 2019: 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, two with China State Shipbuilding Corporation (“CSSC”) entities and one with a AVIC International Leasing Company Limited (“AVIC”) entity. Each of the ICBCL, CMBL, CCBFL, COSCO Shipping, CSSC and AVIC 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 one to 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 each vessel's respective lease period. Refer to note 5 to our consolidated financial statements filed with our Annual Report, for additional details.

While we do not hold any equity investments in the above Lessor 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 results. As of September 30, 2020 and December 31, 2019, the respective vessels are reported under “Vessels and equipment, net” or “Assets under development” in our consolidated balance sheets.

A summary of our payment obligations (excluding repurchase options and obligations) under the bareboat charters with the lessor VIEs as of September 30, 2020, are shown below:


(in thousands of $)	2020 (1)	2021	2022	2023	2024	2025+
Golar Glacier	4,310	17,100	17,100	17,100	12,884	—
Golar Kelvin	4,310	17,100	17,100	17,100	15,695	—
Golar Snow	4,310	17,100	17,100	17,100	15,695	—
Golar Ice	4,310	17,100	17,100	17,100	17,147	1,452
Golar Tundra (2)	4,498	17,604	17,051	16,498	15,953	12,863
Golar Seal	3,382	13,717	13,717	13,754	13,717	13,717
Golar Crystal (2)	2,451	9,804	9,840	9,866	9,901	22,335
Hilli (2)	25,489	100,180	97,187	94,194	91,273	275,722
LNG Croatia (2)	114,497	—	—	—	—	—
Golar Bear (2)	3,511	13,793	13,373	12,952	12,541	26,124

(1) For the three months ending December 31, 2020.

(2) The payment obligations relating to the Golar Tundra, Golar Crystal, Hilli, LNG Croatia and Golar Bear above includes variable rental payments due under the lease based on an assumed LIBOR plus margin.

The assets and liabilities of these lessor VIEs that most significantly impact our consolidated balance sheet as of September 30, 2020 and December 31, 2019, are as follows:


(in thousands of $)	Golar Glacier	Golar Kelvin	Golar Snow	Golar Ice	Golar Tundra	Golar Seal	Golar Crystal	Hilli	LNG Croatia	Golar Bear	September 30, 2020	December 31, 2019
Assets											Total	Total
Restricted cash and short-term deposits	9	1,461	1,461	9	—	13,804	5,074	28,608	6,033	5,279	61,738	34,947


Liabilities
Debt:
Current portion of long-term debt and short-term debt (1)	(114,875)	(134,322)	(115,408)	(88,107)	(10,293)	—	(8,092)	(431,465)	(115,225)	—	(1,017,787)	(963,005)
Long-term interest bearing debt - non-current portion (1)	—	—	—	—	(82,406)	(100,408)	(77,135)	(292,592)	—	(103,498)	(656,039)	(617,124)

	(114,875)	(134,322)	(115,408)	(88,107)	(92,699)	(100,408)	(85,227)	(724,057)	(115,225)	(103,498)	(1,673,826)	(1,580,129)

(1) Where applicable, these balances are net of deferred finance charges.

The most significant impact of the lessor VIE's operations on our unaudited consolidated statements of income, and unaudited consolidated statements of cash flows, are as follows:


(in thousands of $)	Nine months ended September 30,
	2020	2019
Statement of income
Interest expense	27,752	51,445

Statement of cash flows
Net debt repayments	(352,046)	(294,413)
Net debt receipts	444,307	144,278

9.2 Golar Hilli LLC

Following the sale of common units in Golar Hilli LLC ("Hilli LLC"), 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. Accordingly, management has concluded that Hilli LLC is a VIE and that we are the primary beneficiary.

Summarized financial information of Hilli LLC

The assets and liabilities of Hilli LLC(1) that most significantly impact our consolidated balance sheet are as follows:


(in thousands of $)	September 30, 2020	December 31, 2019
Balance sheet
Current assets	80,604	64,507
Non-current assets	1,223,490	1,300,605
Current liabilities	(473,195)	(496,029)
Non-current liabilities	(363,630)	(418,578)

(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 impact of Hilli LLC VIE's operations on our unaudited consolidated statements of income, and unaudited consolidated statements of cash flows, are as follows:


(in thousands of $)	Nine months ended September 30,
	2020	2019
Statement of operations
Liquefaction services revenue	163,572	163,572
Realized and unrealized (loss)/gain on oil derivative instrument	(36,861)	(31,441)

Statement of cash flows
Net debt repayments	(281,972)	(204,447)
Net debt receipts	223,821	129,454

9.3 Gimi MS Corporation

Following the closing of the sale of 30% of the common units of Gimi MS Corporation ("Gimi MS") to First FLNG Holdings in April 2019, 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 impact our consolidated balance sheet are as follows:


(in thousands of $)	September 30, 2020	December 31, 2019
Balance sheet
Current assets	789	24,894
Non-current assets	598,678	434,248
Current liabilities	(73,536)	(9,697)
Non-current liabilities	(202,783)	(107,902)

The most significant impact of Gimi MS VIE's operations on our unaudited consolidated statements of cash flows, is as follows:


(in thousands of $)	Nine months ended September 30,
	2020	2019
Statement of cash flows
Additions to asset under development	142,397	145,358
Net debt receipts	95,000	—
Proceeds from subscription of equity interest	7,098	77,086