First Ship Lease Trust, Singapore-based business trust which owns a fleet of vessels across major shipping sub-sectors, narrowed its fourth-quarter loss to US$33.87 million, down 19.9 per cent, despite lower revenue posted for the period.
FSL Trust Management (FSLTM),, as trusteemanager of First Ship Lease Trust, said that the revenue for the three months ended Dec 31 was S$19.90 million, 14.2 per cent lower compared to a year ago as contributions from vessel charters fell.
The decrease in revenues is attributable to ongoing market volatility and the continued softening of rates across all shipping sectors which has weighed on the Trust’s earnings from its product tankers, crude oil tankers
, chemical tankers
, and feeder container vessels.
In light of the continued deterioration in vessel values, the Trust recognised a non-cash impairment on vessels of US$72.2 million on 12 vessels in FY2017, and a further US$8.9 million impairment recognised on a vessel sold post yearend, these impairments contributing to a net loss of US$33.9 million for Q42017 and US$73.9 million for FY2017. Gearing improved from 47.3% in 4Q16 to 46.6% in 4Q17 notwithstanding impairment charges taken. Net Tangible Assets per unit were US$0.27 as at 31 December 2017.
Commenting on the Trust’s performance, Roger Woods, Chief Executive Officer of FSLTM said: “This has been a challenging year for the Trust with ongoing market volatility continuing to take its toll on all areas of the shipping market. That said, the outlook for the second half of 2018 is beginning to show more encouraging signs, and we remain operationally wellpositioned for the future."
"We continued to pay down our debt through a series of scheduled payments, voluntary prepayments and from vessel disposals, the net proceeds of which have been applied in full to the outstanding loan," he added.
Roger said: "In addition to ensuring the efficient ongoing operational performance of the fleet, and reducing debt, the Board of Directors and Management of the Trust remain committed to securing the Trust’s long term future for the benefit of our unitholders. Our priority remains to secure an acceptable refinancing solution for the long term stability of the Trust, discussions in this respect remain ongoing, and we remain optimistic for a successful outcome.”
During Q42017, FSLTM announced that it has been in negotiations to extend the amortising loan facility secured in December 2011 that fell due for full repayment on 20 December 2017.
A majority of the lenders under the Syndicated Loan Facility have indicated their support for the Extension to the Trustee-Manager. In addition, FSLTM announced that it had been advised that Godan, the sole shareholder of FSL Holdings the major Unitholder of First Ship Lease Trust and sole indirect shareholder of the Trustee-Manager was in discussion with short-listed strategic investors for a potential sale of all of its shares in FSL Holdings.