FSL Trust Management Pte. Ltd., in its capacity as trustee-manager of First Ship Lease Trust refers to its announcement dated 26 November 2018 (the “Preferential Offering Announcement”) in relation to the proposed pro rata, non-renounceable and non-underwritten preferential offering to raise funds for, amongst others, fleet renewal to be carried out through the new and/or more recent build vessels.
Further to the Preferential Offering Announcement, FSLT wishes to announce that it has entered into a Letter of Intent (“LOI”) with Cosco Shipping Heavy Industry (Yangzhou) Co., Ltd., a State-owned shipyard based in the People’s Republic of China (the “Shipyard”), pursuant to which the Shipyard will construct, sell and deliver two (2) scrubber fitted Tier III LR2 product tankers (the “NewVessels”) for an indicative aggregate consideration of US$97,200,000 (the “Newbuilding Acquisition”). FSL-28, Inc. and FSL-29, Inc. (together, the “Purchasers”), each a wholly-owned subsidiary of FSLT, will be nominated to hold the New Vessels.
Image: FSL Trust
The LOI is subject to, amongst others, parties entering into definitive shipbuilding contracts in relation to the Newbuilding Acquisition (the “Definitive Agreements”) and is valid until 20 December 2018. Unitholders should note that there is no certainty or assurance that the Definitive Agreements will be entered into and/or that the Newbuilding Acquisition will materialise or that the indicative aggregate consideration will be maintained.
The New Vessels comprise two (2) 114,000 dwt scrubber fitted Tier III LR2 product tankers and are expected to be delivered to the Purchasers in November 2020 and January 2021 respectively.
The Newbuilding Acquisition is being undertaken as part of the renewal of FSLT’s aging fleet.
The Newbuilding Acquisition, if completed, is expected to reduce the age profile of FSLT’s fleet significantly and enhance its commercial attractiveness and marketability. The Newbuilding Acquisition, if completed, is expected to have a positive financial impact on FSLT. The New Vessels will be constructed according to newer designs and utilize new technologies. As the New Vessels will be more affordable to operate and able to carry a variety of cargos, it is expected that they will be more efficient and easier to charter to counterparties compared to the vessels in FSLT’s current fleet. The New Vessels will also be more attractive for long-term leases to major petroleum companies, therefore allowing FSLT to potentially secure better returns. This is expected to be accretive to FSLT’s cash flow and earnings.
WAIVER APPLICATION AND OUTCOME
On 16 October 2018, FSLT made an application to the Singapore Exchange Securities Trading Limited (“SGX-ST”) for a waiver (“Waiver”) from complying with Rules 1015 and 1014(2) of the Listing Manual of the SGX-ST (the “Listing Manual”) in respect of the Newbuilding Acquisition (the “Waiver Application”), including the requirement for FSLT to obtain unitholders’ approval for the Newbuilding Acquisition. On 18 October 2018, the SGXST informed FSLT that based on the submissions and representations by FSLT in the Waiver Application, it has no objection to the Waiver Application for a waiver of unitholders’ approval for the Newbuilding Acquisition. FSLT will make further announcements in respect of the Waiver Application, which will include all disclosures required to be made under the terms of the Waiver and as required under the Listing Manual, upon the Definitive Agreements being entered into by the parties.
Source: Hellenic Shipping News.