Variable Interest Entities (VIEs) (Tables)

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary of Sale and Leaseback Arrangements

The following table gives a summary of the sale and leaseback arrangements, as at June 30, 2018:

Unit

Effective
from

Sale value
(In $ millions)

First
repurchase
option
(In $ millions)

Month of first
repurchase
option

Last
repurchase
option
(In $ millions)

Month of last
repurchase
Option*

West Taurus

Nov 2008

850

418

Feb 2015

149

⁽¹⁾

Nov 2023

West Hercules

Oct 2008

850

580

Aug 2011

135

⁽¹⁾

Aug 2023

West Linus

June 2013

600

370

June 2018

170

⁽²⁾

June 2028

⁽¹⁾	Purchase obligations at the end of the 15-year lease period

⁽²⁾	Ship Finance has a right to require us to purchase the West Linus rig on the 15^th anniversary for $100 million if we do not exercise the final repurchase option

Summary of Bareboat Charter Rates per Day Based on Base LIBOR Interest Rate for Next Five Years

A summary of the bareboat charter rates per day for each unit is given below.


	(In $ thousands)
Unit	2018		2019		2020		2021		2022		2023
West Taurus		112		103		101		97		96		181
West Hercules		118		101		100		96		96		184
West Linus		158		122		99		99		93		189

Assets and Liabilities in Statutory Accounts of VIEs

The assets and liabilities in the financial statements of the VIEs as at June 30, 2018 and as at December 31, 2017 are as follows:


	As at June 30, 2018						As at December 31, 2017
(In $ millions)	SFL Deepwater Limited		SFL Hercules Limited		SFL Linus Limited		SFL Deepwater Limited		SFL Hercules Limited		SFL Linus Limited
Name of unit	West Taurus		West Hercules		West Linus		West Taurus		West Hercules		West Linus
Investment in finance lease		326		316		414		335		326		431
Amount due from related parties		3		4		—		4		4		—
Other assets		6		6		7		6		6		8

Total assets of the VIEs		335		326		421		345		336		439

Short-term interest bearing debt		19		28		45		226		27		48
Long-term interest bearing debt		196		210		240		—		224		261
Other liabilities		10		10		—		3		2		—
Short-term amounts due to related parties		—		—		12		—		—		4
Long-term debt due to related parties		106		73		115		113		80		121

Total liabilities of the VIEs		331		321		412		342		333		434

Equity of the VIEs		4		5		9		3		3		5

Book value of units in the Company’s consolidated financial statements		373		525		504		385		508		515

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

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