Variable Interest Entities (Tables)

12 Months Ended

Dec. 31, 2019

Variable Interest Entity, Measure of Activity [Abstract]

Summary of sale and leaseback arrangements and repurchase of options

The following table gives a summary of the sale and leaseback arrangements and repurchase options, as at December 31, 2019:

Unit

Effective

from

Sale value

(In $ millions)

First

repurchase

option

(In $ millions)

Month of first

repurchase

option

Last

repurchase

option ⁽¹⁾

(In $ millions)

Month of last

repurchase

Option ⁽¹⁾

West Taurus

Nov 2008

850

418

Feb 2015

154

Dec 2024

West Hercules

Oct 2008

850

580

Aug 2011

138

Dec 2024

West Linus

June 2013

600

370

Jun 2018

170

May 2029

(i) Ship Finance has a right to require us to purchase the West Linus for $86 million if we don’t exercise the final repurchase option.

Summary of average bareboat charter rates

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



(In $ thousands)	2020	2021	2022	2023	2024
West Taurus	101	96	96	181	177
West Hercules	100	96	96	183	176
West Linus	99	99	92	189	153

Schedule of assets and liabilities in statutory accounts of the VIEs

The balance sheets of the VIEs on a stand-alone basis at December 31, 2019 and December 31, 2018 (Successor) were as follows:



	Successor	Successor
(In $ millions)	As at December 31, 2019	As at December 31, 2018
Cash and cash equivalents	22	2
Investment in finance lease	972	1,024
Total assets of the VIEs ⁽¹⁾	994	1,026

Short-term interest bearing debt ⁽²⁾	48	33
Long-term interest bearing debt ⁽²⁾	550	593
Other liabilities	5	2
Short-term amounts due to related parties	12	31
Long-term debt due to related parties ⁽³⁾	239	222
Total liabilities of the VIEs	854	881
Equity of the VIEs	140	145

⁽¹⁾ Book value of units in the Company's consolidated financial statements as at December 31, 2019 was $784 million (December 31, 2018: $823 million).


⁽²⁾	Total interest bearing debt comprises principal outstanding of $621 million offset by $23 million debt discount (December 31, 2018: $655 million principal outstanding offset by $29 million debt discount).


⁽³⁾	We present balances due to/from Ship Finance on a net basis, due to the fact that there is a right to offset established in the long-term loan agreements, and the balances are intended to be settled on a net basis as shown in the table below:



	Successor		Successor
(In $ millions)	As at December 31, 2019		As at December 31, 2018
Debt principal outstanding	314		314
Debt discount	(75	)	(88	)
Trading liability positions held against long-term loan	—		(4	)
Long-term loan due to related parties	239		222

- 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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