Only a week after the announcement of its first proposed acquisition in 2011, First Ship Lease Trust (“FSL Trust” or the “Trust”), which is managed by Trustee-Manager FSL Trust Management Pte. Ltd. (FSLTM), has entered into another definitive agreement to purchase its second Long Range II (LR2) product tanker from TORM Singapore Pte. Ltd., a wholly-owned subsidiary of TORM A/S (“TORM”), for US$46 million. Vessel delivery is scheduled to take place within June 2011.
The MT TORM Marie, a sister vessel of MT TORM Margrethe (which proposed acquisition from TORM was recently announced by the Trust1), is a 2006-built, 109,672 dwt product tanker constructed by Dalian Shipbuilding Industry Co. Ltd. Following the completion of the acquisition, MT TORM Marie will be leased back to TORM on a bareboat charter basis for a base lease term of seven years on slightly better terms than the MT TORM Margrethe. As before, the bareboat charter agreement is structured with recourse to TORM and contains a purchase option at the expiry of the base lease term, an early buy-out option on or after the fifth anniversary of the lease term, as well as three extension options of one year each. The MT TORM Marie acquisition will be fully funded by the drawdown of US$23 million from the Trust’s existing revolving credit facility and US$23 million in cash, of which US$15 million will come from a private placement of up to 57 million new FSL Trust units (please refer to FSL Trust’s separate news release dated 9 June 2011).
The latest charter of MT TORM Marie will be immediately accretive to distributable cash flow per unit after taking into account the new unit placement and will propel the Trust’s remaining contracted revenue to US$635 million, excluding extension options. In addition, the Trust’s average remaining lease term will be at 6.7 years. Upon acquisition of both the MT TORM Margrethe and MT TORM Marie, the Trust’s young, high quality and diversified asset portfolio will increase to 25 vessels, up from the current 23.
Mr Vijay Kamath, Senior Vice-President and Head of Sales of FSLTM , said: “That we are able to conclude this second bareboat charter so soon after tying up the first reflects the market’s healthy appetite for alternative forms of shipping finance. “While transaction opportunities abound, we will continue to only take on charters which are accretive to distributable cash flow per unit and which diversify our vessel and client portfolio at the same time. FSL Trust remains committed to prudently growing the sustainable long-term cash flow that supports our distributions to unitholders.” FSL Trust Management Pte. Ltd. will make a further announcement once the acquisition is completed.
[mappress] Source: FSL, June 13, 2011.