SFL - Adjusted agreement with Frontline Ltd.

Press release from Ship Finance International Limited, May 29, 2015.

Ship Finance International Limited (NYSE:SFL) ("Ship Finance" or the "Company"), today announced that it has entered into a heads of agreement to amend the long-term chartering agreements with Frontline Ltd. ("Frontline").

The Company currently has 17 vessels on charter to subsidiaries of Frontline, with an average remaining charter term of nearly 8 years. The new agreement will take effect from July 1, 2015 and will be a combination of reduced long-term base rates, increased profit split and an ownership share in Frontline. The operating expenses, including dry-docking, payable to a subsidiary of Frontline will also be adjusted to current market level.

• New time charter rate for VLCCs: $20 000/day
  
  

• New time charter rate for Suezmaxes: $15 000/day
  
  

• New opex for all vessels: $9,000/day
  
  

• New profit split: 50% above new time charter rates
  
  

• 55 million Frontline shares will be issued to Ship Finance

Ship Finance will continue chartering the vessels to a subsidiary of Frontline, and in exchange for releasing Frontline from their current guarantee obligation on the charters, a cash buffer of $34 million ($2 million per vessel) will be built up in the chartering company.

Accrued cash sweep from January through June 2015 based on the existing agreement, estimated to approximately $20 million, will be paid in cash to Ship Finance.

Under the current agreement, Ship Finance is entitled to a 25% profit split above approximately $26,700/day for the VLCCs and $21,100/day for the Suezmaxes, calculated and payable on an annual basis. Frontline prepaid $50 million of this profit split in December 2011, and no additional profit split has so far accumulated in excess of this amount.

The new profit split agreement will start accruing from July 1, 2015 and will now be calculated and paid on a quarterly basis. Going forward, profit split payments will not be subject to the previous $50 million threshold.

Based on closing shareprice on May 28, 2015, of $3.06 per share, the market value of the Frontline shares to be issued to the Company is approximately $168 million, and based on the volume-weighted shareprice last 3 months of $2.64 per share, the value is approximately $145 million.