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My Yield
Estimator for FSLT
Net Distributable Income - US$8.3 million
Loss of Income from Groda US$3.73 million
Gain of Income from Rosneft: US$1.26 million
Gain from forfeit of Management fees: US$0.15 million
New Distributable Income: US$5.98 million or US$0.01/quarter
Note this excludes the following -
a) Gain of Income from newly acquired vessel (estimated US$1 million/quarter). Vessel should be delivered in 2Q 10.
b) Usage of US$6 million for either cash payout or loan repayment which will reduce interest expense.
c) FSLTM charters the vessel out to a different party. It is still exploring other commercial options while the 2 vessels carry out their planned voyage.
Net Distributable Income - US$8.3 million
Loss of Income from Groda US$3.73 million
Gain of Income from Rosneft: US$1.26 million
Gain from forfeit of Management fees: US$0.15 million
New Distributable Income: US$5.98 million or US$0.01/quarter
Note this excludes the following -
a) Gain of Income from newly acquired vessel (estimated US$1 million/quarter). Vessel should be delivered in 2Q 10.
b) Usage of US$6 million for either cash payout or loan repayment which will reduce interest expense.
c) FSLTM charters the vessel out to a different party. It is still exploring other commercial options while the 2 vessels carry out their planned voyage.
grandmaster89 ( Date: 11-May-2010 19:39) Posted:
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For Immediate Release
FIRST SHIP LEASE TRUST PROVIDES UPDATE ON THE RE-DELIVERY OF ‘VERONA I’ AND ‘NIKA I’
• Vessels continue to perform under Contracts of Affreightment with Rosneft
• Trustee-Manager continues to explore alternative commercial solutions that
optimise revenue generation
• No trigger of event of default under loan agreement and no interest cost
impact
• 2Q FY10 distribution per unit (“DPU”) guidance of US1.5 cents under review
Singapore, 11 May 2010 - FSL Trust Management Pte. Ltd. (“FSLTM”), Trustee-Manager of First Ship Lease Trust (“FSL Trust” or the “Trust”) refers to the earlier announcement1 on 4 May 2010 and wishes to provide an update on this matter.
The lessees of the vessels ‘Verona I’ and ‘Nika I’ (the “Lessees”), which are affiliates of Groda Shipping & Transportation Ltd. (“Groda Shipping”), made requests to FSL Trust on 3 May 2010 to take re-delivery of the two vessels. The Lessees have indicated that it has become increasingly difficult for them to improve their cash flow and the reasons appear to be:
a. the higher voyage expenses due to escalating bunker prices;
b. under-utilisation of the vessels under the Contracts of Affreightment with OJSC Rosneft Oil Company (the “COAs”); and
c. limited options to generate incremental revenue given the trading area of the vessels.
For the month of May, the Lessees made full payment only for ‘Nika I’ but not for ‘Verona I’. They have informed FSLTM that they will not make full payments for either vessel from June 2010 onwards under the respective bareboat charter agreements.
FSLTM has received confirmation that both ‘Verona I’ and ‘Nika I’ are in good operating condition and that FSL Trust’s subsidiaries, as owners of the vessels, are properly insured against all major maritime risks. In addition, FSLTM has appointed Columbia Shipmanagement (Singapore) Pte. Ltd. as technical advisor to provide assistance in all technical and operational matters.
At this juncture, FSLTM expects both vessels to continue to perform smoothly under the respective COAs. Two important factors that will affect the cash flows of the two vessels are bunker expenses and the actual cargo volume shipped under the COAs. Based on prevailing bunker prices and the conservative assumption that the vessels carry only the contractually guaranteed cargo volume without any incremental revenue from other sources, the vessels could earn approximately US$13,000 per day/vessel on a time charter equivalent basis (or about US$7,000 per day/vessel on a bareboat charter equivalent basis2).
Mr Philip Clausius, CEO of FSLTM said: “While this contingent event is regrettable, the management has, in a very short period of time, assumed control of the situation and we are putting systems in place to deal with the new circumstances in a professional manner. The vessels have planned voyages under the COAs and our immediate priority is the continued smooth operation of the vessels whilst we explore alternative commercial solutions that would optimize our revenue generation. Notwithstanding the fact that management is spending exponentially more time on these two vessels, FSLTM has decided to voluntarily suspend the management fee it is entitled to receive from the Trust for these two vessels until further notice.”
Mr Cheong Chee Tham, CFO of FSLTM said: “It is important to highlight that this specific event does not trigger an event of default under our loan agreement nor does it result in an increase in interest expense. Whilst the near-term cash generation potential for these two vessels might be substantially less than the originally contracted bareboat charter rate, it is worth noting that the US$6 million cash security deposit provides a cushion against the loss. As a result of this development, our DPU guidance for 2Q FY10 and beyond is under review by our Board of
Directors.”
FSLTM would like to highlight that all its other lease agreements are structured with full recourse to entities of substance, either through a corporate guarantee, or otherwise on the basis of direct contractual recourse. FSLTM is presently not aware of any information that would lead it to believe that its other customers would not continue to fulfil their lease payment obligations.
FIRST SHIP LEASE TRUST PROVIDES UPDATE ON THE RE-DELIVERY OF ‘VERONA I’ AND ‘NIKA I’
• Vessels continue to perform under Contracts of Affreightment with Rosneft
• Trustee-Manager continues to explore alternative commercial solutions that
optimise revenue generation
• No trigger of event of default under loan agreement and no interest cost
impact
• 2Q FY10 distribution per unit (“DPU”) guidance of US1.5 cents under review
Singapore, 11 May 2010 - FSL Trust Management Pte. Ltd. (“FSLTM”), Trustee-Manager of First Ship Lease Trust (“FSL Trust” or the “Trust”) refers to the earlier announcement1 on 4 May 2010 and wishes to provide an update on this matter.
The lessees of the vessels ‘Verona I’ and ‘Nika I’ (the “Lessees”), which are affiliates of Groda Shipping & Transportation Ltd. (“Groda Shipping”), made requests to FSL Trust on 3 May 2010 to take re-delivery of the two vessels. The Lessees have indicated that it has become increasingly difficult for them to improve their cash flow and the reasons appear to be:
a. the higher voyage expenses due to escalating bunker prices;
b. under-utilisation of the vessels under the Contracts of Affreightment with OJSC Rosneft Oil Company (the “COAs”); and
c. limited options to generate incremental revenue given the trading area of the vessels.
For the month of May, the Lessees made full payment only for ‘Nika I’ but not for ‘Verona I’. They have informed FSLTM that they will not make full payments for either vessel from June 2010 onwards under the respective bareboat charter agreements.
FSLTM has received confirmation that both ‘Verona I’ and ‘Nika I’ are in good operating condition and that FSL Trust’s subsidiaries, as owners of the vessels, are properly insured against all major maritime risks. In addition, FSLTM has appointed Columbia Shipmanagement (Singapore) Pte. Ltd. as technical advisor to provide assistance in all technical and operational matters.
At this juncture, FSLTM expects both vessels to continue to perform smoothly under the respective COAs. Two important factors that will affect the cash flows of the two vessels are bunker expenses and the actual cargo volume shipped under the COAs. Based on prevailing bunker prices and the conservative assumption that the vessels carry only the contractually guaranteed cargo volume without any incremental revenue from other sources, the vessels could earn approximately US$13,000 per day/vessel on a time charter equivalent basis (or about US$7,000 per day/vessel on a bareboat charter equivalent basis2).
Mr Philip Clausius, CEO of FSLTM said: “While this contingent event is regrettable, the management has, in a very short period of time, assumed control of the situation and we are putting systems in place to deal with the new circumstances in a professional manner. The vessels have planned voyages under the COAs and our immediate priority is the continued smooth operation of the vessels whilst we explore alternative commercial solutions that would optimize our revenue generation. Notwithstanding the fact that management is spending exponentially more time on these two vessels, FSLTM has decided to voluntarily suspend the management fee it is entitled to receive from the Trust for these two vessels until further notice.”
Mr Cheong Chee Tham, CFO of FSLTM said: “It is important to highlight that this specific event does not trigger an event of default under our loan agreement nor does it result in an increase in interest expense. Whilst the near-term cash generation potential for these two vessels might be substantially less than the originally contracted bareboat charter rate, it is worth noting that the US$6 million cash security deposit provides a cushion against the loss. As a result of this development, our DPU guidance for 2Q FY10 and beyond is under review by our Board of
Directors.”
FSLTM would like to highlight that all its other lease agreements are structured with full recourse to entities of substance, either through a corporate guarantee, or otherwise on the basis of direct contractual recourse. FSLTM is presently not aware of any information that would lead it to believe that its other customers would not continue to fulfil their lease payment obligations.
FSL Trust is unique because despite being a shipping trust, its sponsors are maritime banks -
a) HSH Nordbank AG (world largest shipping financier)
b) UniCredit Group (European bank with 10,000 branches)
c) Schoeller Holdings Ltd (private owned conglomerate dealing with ship management, ship owning, hotels and restaurants)
They have expertise in dealing with charter defaults.
Might rebound soon. Very oversold.
The estimated yield is now 14%.
Announcements of new contract wins, new vessel acquisition and legal settlement with Groda will spur it higher.
when it reaches 42 n below can buy again
FSLTM have a lot of experience in such matters....look at their sponsors. If you think Rickmer Group or PIL (for PST) is strong, look at FSL sponsors LOL. They know what to do haha !!!
Net distributable Income: US$8.3 million
Loss of Income from Groda: US$3.73 million
Gain of Income from New Charter at 50% discount: US$1.9 million
Income from Newly Acquired Vessel: US$1.1 million (assuming 15% return on US$30 million vessel)
New Distributable Income: US$7.57 million or US$0.0126 per quarter
I ignored the US$6 million cash in-flow forfeited by Groda which may be used to support DPU for the next 2 quarters. I also ignore any potential settlement or ligitation payouts if FSLT decides to sue.
Free Float is around 63%. Major Shareholders are the Sponsor, Bridge Partners and Duetsche Bank.
New DPU should stand at 1.25 US cents
FREE FLOAT 37.4%
= 3 MAJOR SHAREHOLDERS' TOTAL
This cOuld bE an ErrOr ?
FREE FLOAT may bE 100% - 37.4% = 62.6%
FREE FLOAT On HiGH SiDE ?
pharoah88 ( Date: 06-May-2010 18:21) Posted:
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At A Glance
Issued Capital (m shrs) 599
Mkt. Cap (S$m/US$m) 326 / 236
Major Shareholders
FSL Holdings Pte Ltd (%) 26.4
Bridge Partners (%) 6.0
Deutsche Bank (%) 5.0
Free Float (%) 37.4
Avg. Daily Vol.(‘000) 1,154
HOLD S$0.545
STI : 2,901.18(downgrade from BUY)
Price Target : 12-Month S$ 0.55 (Prev S$ 0.78)
Reason for Report : Contract breach by counterparty
Potential Catalyst: Clarity on future deployment of affected vessels
Analyst
Suvro Sarkar +65 6398 7973
Unexpected counterparty issues •
returns product tankers prematurely to cut losses • •
the presence of corporate guarantees as recourse • Charterer wants to return 2 vessels prematurely.
Impact cash flow significantly.
However, the COA revenue should be significantly lower than the current bareboat charter rate, and FSLT would have to assume operating risks as well. The other option for FSLT is to scout for 3 Quarterly DPU could fall to 1.1UScts from 1.5UScts in the near term.
Impact on DPU could be lower if part of the U$6m security is channeled into distributions.
suvro@dbsvickers.com
| FSL Trust | Symbol: D8DU |
Currency: Singapore Dollar |
| Last: | 0.51 |  -0.01 |
Vol (K): 4843.0 |
| Trading | |||||
| Updated Time | 06-May 17:05 | ||||
| Open | 0.52 | High | 0.52 | Low | 0.5 |
| Prev Close | 0.52 | Buy | - | Sell | - |
| Volume(K) | 4843.0 | Buy Vol(K) | - | Sell Vol(K) | - |
| 52 Wk High | 0.69 | 52 Wk Low | 0.375 | 52 Wk Avg Vol | 1004.546 |
| All Time High | 1.32 | All Time Low | 0.32 | ||
| Comments | No Info | ||||
*Technical Analysis Information is updated Daily
| Technicals | |||||
| RSI | 15.86 | Williams %R | -100.0 | ||
| Comments (RSI) | Oversold | Comments (W%R) | Oversold | ||
Intraday Chart
YES
soloman ( Date: 04-May-2010 22:26) Posted:
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General Maritime Corp finalized a 6 month Time Charter agreement for its product tanker (47,000 DWT) at US$12,500/day in Q1 10.
Possibility that FSLT new charter agreement will face a 30-40% reduction in charter income remains high.
Wonder whether will FSLT seek legal damages or compensation besides the US$6 million security deposit forfeit ?
Expect quarterly dpu (once new agreements made) to be around US$0.0125 - US$0.013
DO U OWN THIS SHARES ......................
grandmaster89 ( Date: 04-May-2010 16:53) Posted:
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This one probably comes at the wrong time when the whole market is also shivering. Double Whammy
This one is a small issue compare to Rickmer. N i believe FSL will speed up to look for new customer to loan the vessel.
Current case open opportunity fr investor to buy at low. Cheers.
Share PRiCE adjustment to maintain 13.1% YiELD
grandmaster89 ( Date: 04-May-2010 16:53) Posted:
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It won't be another Rickmers since it has no debt problems. Its revenue will fall though since charter rates are significantly lesser than 2007. I find it strange that Groda is unwilling to pay for the charter rates when the vessel is under COA charter with Rosneft and they had no qualms paying for it in late 08 and the whole of 2009 when charter rates were even lower. I am guessing Rosneft wishes to end the COA hence Groda needs to return the vessels back and loses the US$6 million deposit.
Operating Cash In-flow: US$16.3 million
Loan Repayment: US$8 million
Net Distributable Amount: US$8.3 million
Charter loss from 2 Vessels: US$3.73 million
Charter Income from 2 vessels at US$11K/day: US$2 million
FSLT will acquire a US$30 million vessel with 15% return in the coming weeks.
Charter Income from newly acquired vessel: US$1.1 million
Potential Net Distributable Amount: US$7.7 million or US$0.01283/quarter
This translates to an annual yield of 13.1%
Hence the market has readjusted the share price to match the previous yield. I ignored the US$6 million cash-in flow from the forfeit of their deposit. It should be able to sustain 2 quarters worth of dividend payouts in place of the income loss. FSLT has 6 months to look for a value accretive charterer. It is easy to find the charter - the question is at what rates. Should FSLT wait for crude oil prices to keep rising to boost tanker rates or search for a charterer asap ?