FSL Trust sinks further with $7.2m net loss

2QFY13 plagued by lease payment defaults.

In a release, FSL Trust Management Pte. Ltd. (FSLTM), as trustee-manager of First Ship Lease Trust (FSL Trust), announced the Trust’s financial results for the quarter ended 30 June 2013 (2QFY13).

FSL Trust’s reported revenue of US$21.3 million for 2QFY13 was 27.2% lower than for the corresponding quarter last year (2QFY12). During the quarter, the lessees of the Trust’s two crude oil tankers defaulted on their lease payments. Nevertheless, the Trust’s other 23 vessels were fully employed, generating revenue from long-term bareboat charters, time charters and pool employment.

On a bareboat charter/bareboat charter equivalent (BBCE) basis, revenue fell 15.2% year-onyear to US$17.7 million. Other operating expenses rose by 11.4% year-on-year to US$18.7 million. This increase was attributable mainly to an impairment loss of US$3.1 million arising from the defaults on lease payments by the Geden subsidiaries, which was partially offset by a decrease in other trust expenses. In 2QFY13, other trust expenses included US$0.3 million incurred for the redelivery of the two crude oil tankers. In the corresponding period last year, vessel-related expenses of US$1.1 million were incurred for the redelivery of the three chemical tankers and for a change in technical manager for FSL Hamburg and FSL Singapore.

Consequently, FSL Trust recorded an operating loss of US$1.0 million compared with an operating profit of US$4.0 million in the corresponding period last year. After taking into account net finance expenses, the Trust incurred a net loss of US$7.2 million in 2QFY13.

In relation to FSL Trust’s bank loan facility, FSLTM has approved all the conditions for an extension of the relaxation of two loan covenants from the Trust’s lenders for another six months until 31 December 2013. The formal documentation of this extension is pending the final endorsement by the lenders. During the quarter, the Trust paid its quarterly loan amortisation of US$11.0 million and also made an additional prepayment of US$10.0 million to further reduce its outstanding loan balance.

As at 30 June 2013, cash and cash equivalents stood at US$26.2 million (against US$37.0 million as at 31 March 2013). No distributions have been declared for 2QFY13.