SINGAPORE - First Ship Lease Trust's (FSLT) manager on Tuesday (Nov 27) proposed a non-renounceable preferential offering of three rights units for every two existing units held at an issue price of $0.045 per new unit to raise up to $43.03 million.
FSLT, which owns a fleet of shipping vessels, will issue up to 956 million new units for the offering. The issue price of $0.045 per new unit is a discount of 31.8 per cent to the closing price of $0.066 per FSLT unit on the Singapore Exchange on Nov 26, it being the last trading day of the units prior to the announcement.
An extraordinary general meeting of FSLT will be convened to seek approval from unitholders for the issuance of the new units.
Entitled unitholders can accept or decline their provisional allotment of new units and are eligible to apply for additional new units in excess of their provisional allotments under the preferential offering. However, they are prohibited from trading or transferring their provisional allotments of new units.
FSLT's manager said that the preferential offering will strengthen the financial position and capital base of FSLT, enhancing its financial flexibility to renew its ageing fleet, therefore reducing the age profile and enhancing its commercial attractiveness and marketability.
It added that unitholders will benefit from FSLT's subsequent increase in market capitalisation, potentially improving the trading liquidity of the units.
At least half of the proceeds will go to fleet renewal, which will be through the acquisition of new or more recent build vessels to meet anticipated market conditions.
Sponsor FSL Holdings, which has an aggregate interest in 158 million units or 24.77 per cent of the issued units, will provide a conditional undertaking to FSL in which they will subscribe and pay in full their total pro rata allotment of new units under the preferential offering.
In the event of the minimum subscription scenario, the preferential offering will raise gross proceeds of about $10.66 million and net proceeds of about $10.16 million, after deducting estimated expenses of about $0.5 million.