FSL Trust Management Pte. Ltd. (“FSLTM”), as trustee-manager of First Ship Lease Trust (“FSL Trust” or the “Trust”) refers to its earlier announcement “FSL Trust renegotiates charter terms for TORM product tankers” made on 10 April 2012 and wishes to provide an update.
On 2 October 2012, TORM A/S (“TORM”) announced the signing of a restructuring agreement with its banks and tonnage providers that will secure for TORM substantial deferral of its bank debt, new liquidity and savings from its restructured time charter book1. Subject to the technical completion of the restructuring agreement, which is expected within four weeks, tonnage providers, including FSL Trust, who have agreed to permanently amend their charter contracts, will receive in aggregate a 17.3% equity stake in the enlarged share capital of TORM.
As part of TORM’s restructuring agreement, FSLTM had previously agreed to and obtained formal approval from its lenders for the realignment of the charter terms for its two TORM product tankers. The main realigned terms are:
a) Bareboat charter rates for the two product tankers will be variable rates that TORM achieves in the market.
b) The early buyout, purchase and lease extension options in the original agreements are cancelled.
FSL Trust has the option to terminate the two charters before their maturity in 2018 if TORM underperforms the market benchmark rates by a pre-agreed margin, tested semi-annually.
FSLTM highlights that, barring unforeseen circumstances, the Trust will be able to service its debt obligations under its loan agreement even at the realigned charter rates.
Further announcements will be made as and when there are material developments in this matter.