FSL Trust demands redelivery of oil tankers from Geden subsidiaries

After both subsidiaries defaulted on payments.

In a release, FSL Trust Management Pte. Ltd. (FSLTM), as trustee-manager of First Ship Lease Trust (FSL Trust), wishes to announce that the lessees (the “Lessees”) of its two crude oil tankers, namely, Aqua and Action, have defaulted on their lease payments and FSLTM has today demanded the redelivery of these vessels. The Lessees are wholly-owned subsidiaries of Geden Holdings Ltd. (Geden). 

FSLTM had been in restructuring discussions with Geden since the end of 2012. However, as of the date of this announcement, the Lessees have failed to pay the agreed lease payments due for Aqua and Action. The obligations of the Lessees are guaranteed by Geden pursuant to the deeds of guarantee. 

FSLTM has technical and commercial management contingency plans in place for the vessels and intends to deploy the vessels in the spot market for the short term whilst exploring longer term employment options. In the current market environment, lease rates are expected to be lower than those contracted in the lease agreements with the Lessees.

Barring unforeseen circumstances, FSL Trust’s vessel portfolio is able to generate sufficient cash flows to satisfy the Trust’s principal and interest payments. The default will not have a material impact on the net tangible assets per unit of FSL Trust.