Ship Finance International Ltd. Announces Adjusted Agreement with Recapitalized Frontline Ltd.

Ship Finance International Ltd. announced that the Company has agreed, subject to final board and bank financing approvals, to amend the terms of the long-term chartering agreements with Frontline Ltd. (Frontline). Due to a proposed recapitalization of Frontline, where some of their assets will be sold and a capital commitment relating to newbuildings will be transferred to a new company to be established - Frontline 2012, all of Frontline's tonnage providers, including Ship Finance, have been requested to reduce the base charter rates in order for the restructured Frontline to manage through a potentially very weak spot tanker market in the short to medium term. For Ship Finance, the preliminary agreement is to reduce the base charter rates by $6,500 per day per vessel from 2012 through 2015, and thereafter revert to previous charter rate levels. Ship Finance will receive a restructuring compensation of $106 million in cash from Frontline, including the release of $56 million restricted cash serving as security for their charter payments to the Company. The remaining $50 million will be an early payment of profit split, and will effectively be used to offset future profit split revenues over and above the old base rate. There will also be an adjustment to the profit split calculation whereby Ship Finance will get 100% up to the old base rate levels, and 25% profit split above that. The profit split will be payable on an annual basis as before.