FSL Trust sells chemical tanker for US$13.8 million to repay debt

FIRST Ship Lease Trust (FSL Trust) has sold a chemical tanker for US$13.8 million to help cut its debt.

Net proceeds from the disposal will be used in full to repay an outstanding loan facility in the first quarter of the fiscal year 2018, the trustee-manager said in a bourse filing on Tuesday.

It added that FSL Trust will record a related impairment charge of about US$9 million in the fourth quarter of 2017.

The chemical tanker, FSL Tokyo, is a 2006, Japanese-built, 20,938 deadweight tonnage vessel that has been deployed in the spot market.

FSL Trust had applied to the Singapore High Court for a scheme of arrangement in December, proposing a one-year extension to a syndicated loan facility that has some US$165.6 million outstanding.

Roger Woods, chief executive of the trustee-manager, said the sale of the vessel will further reduce the debt due under the syndicated loan facility.

"The amount outstanding under the facility following the application of the sale proceeds of FSL Tokyo will be US$138 million which represents a very significant reduction from the debt outstanding in June 2013 of US$425 million when there were significant changes in the trust's board and management," he said.

Mr Woods added that the board and management are continuing to pursue solutions for refinancing the trust.

In a separate announcement on the same day, the trustee-manager said the Singapore High Court has given the company approval to convene a meeting for the lenders of its syndicated loan facility by Feb 28, to consider and approve the scheme of arrangement.

The court has also ordered that no action is to be taken against the company and its vessel-owning subsidiaries.

The trustee-manager reiterated that as previously announced, the scheme does not include the trust's trade creditors as the trade and other liabilities.

"The trust remains in a substantial net equity position and the business and operations of the trust will continue in the normal course," it said.

Units of FSL Trust closed flat at 9.3 Singapore cents on Tuesday, before the announcement was made.