THE trustee-manager of First Ship Lease Trust (FSL Trust) has sold the trust's two dry bulk vessels, MT Stella Fomalhaut and MT FSL Durban.
The sale is expected to save FSL Trust some US$3 million (S$3.8 million) in dry dock capital expenditure in the financial period ending March 31 and reduce its cost of debt service in the first quarter and the financial period ending June 30 by at least US$5 million.
FSL Trust sold the dry bulk vessels for US$23.55 million in cash, which took into account current strong market asset prices and the advantage to FSL Trust of saving the significant cost of a third special survey and dry docking of each vessel.
The net proceeds from the disposal will be applied to the outstanding loan facility and to reduce subsequent principal repayments in the first and second quarter.
It represents an additional element of the previously announced agreement with lenders to extend the loan covenant relaxation till Dec 31.
The disposal is part of the trust's efforts to stabilise its position and to conserve cash following the series of lessee defaults and subsequent reduction in revenues over the past 24 months.
By ensuring that the trust need not incur the cost of dry docking the vessels, and through obtaining at least US$5 million of relief from its lenders in relation to scheduled loan repayments, the liquidity position and prospects for the trust are significantly improved.
There are no immediate plans for further vessel sales.