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Navios throws troubled FSL Trust a lifeline

Friday, April 28, 2017 - 12:49

NAVIOS Maritime Holdings Inc has extended financially troubled First Ship Lease Trust a lifeline comprising a mix of equity and debt financing for the shipping trust and its affiliates.

Navios has agreed under a term sheet entered into with the trustee manager of FSL Trust on April 28, 2017, to extend a US$20 million second priority mortgage convertible loan to the trust.

The interest-bearing convertible loan is intended to be termed out for one year. The loan is also intended to solely pay down or refinance the existing mortgage debt and other loan facilities of FSL Trust.

The loan shall be convertible into units in FSL Trust. It is envisaged when the loan is converted into units, Navios may hold at least 50.1 per cent of the total number of issued units in the trust on a fully diluted and as converted basis.

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The term sheet also called on Navios to acquire over 154 million units representing about 24.23 per cent of issued units in FSL Trust from FSL Holdings Pte Ltd for US$20 million.

Navios will also acquire all issued and paid-up shares held by FSL Holdings in FSL Asset Management Pte Ltd.

The deal is subject to, among others, restructuring of the existing mortgage debt and other loan facilities of FSL Trust and regulatory approvals.

The parties have agreed to enter into exclusive negotiations with a view to executing the definitive agreements by Sept 30, 2017.

Navios has earlier this month entered into a separate deal to buy out Rickmers Maritime's fleet for US$113 million through one of its business units.

Both Rickmers Maritime and FSL Trust, as listed shipping trusts on the Singapore Exchange, have encountered rough waters in a prolonged sectorial downturn.

Moore Stephens, the auditors of FSL Trust, had flagged going concern issues, highlighting the trust's full-year net loss of US$31 million and the fact that its current liabilities exceeded current assets by US$179.4 million.

Rickmers announced a winding-up petition after failing to secure support from noteholders and senior lenders to restructure its outstanding notes and bank debts.

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