FIRST Ship Lease Trust (FSL Trust) said on Monday that it has entered into a memorandum of agreement (MOU) to purchase a medium range product tanker for US$21.8 million.
The acquisition of this 2007, Japanese-built, 45,998-dwt tanker will be financed through existing cash reserves, which stood at US$41.8 million as at June 30.
The vessel is expected to be delivered to the trust between Nov 1 and Jan 31, and is intended to be employed in the spot market through a first-class commercial manager.
FSL Trust Management Pte Ltd (FSLTM), the trustee manager of FSL Trust, said it expects this to deliver an annual cash-on-cash yield of 14.5 per cent based on a conservative TCE of US$16,500 per day over the next three years.
Upon delivery of the vessel, FSL Trust's fleet will stand at 24 vessels, comprising seven containerships, 12 product tankers, three chemical tankers and two crude oil tankers.
FSLTM chief executive Alan Hatton said that this acquisition demonstrates the ongoing execution of the group's strategy outlined earlier this year to renew the fleet and generate incremental revenue ahead of the scheduled redelivery in 2016 of the Panamax containership vessels, currently on bareboat charter to Evergreen.
In April, the trust announced a two-year time charter agreement with a prominent US domestic oil company for FSL Hong Kong, a crude oil tanker. It recently secured new time charter agreements worth up to US$61 million over the next three years for the Aframax crude oil tanker, FSL Shanghai and MR product tankers, FSL Hamburg and FSL Singapore with a leading global commodities trader.