FSL Trust Management Pte. Ltd., announced yesterday that it has acquired two crude oil tankers on Friday, 18 April 2008, from privately held and Turkey-based Geden Lines ("Geden") for a total consideration of US$140 million. Geden is Turkey's largest shipping company with a total of 77 ships trading or on order at various shipyards. Geden is part of the Turkish Cukurova conglomerate which is ultimately controlled by the prominent Karamehmet family. The acquired vessels have been concurrently leased back to the seller for a lease term of 10 years. The lease payments are on a floating basis resetting on a quarterly basis in line with changes in the 3-month US$ Libor rate. For each vessel, the lease agreement contains a total of four purchase options for the lessee with the earliest one on the fourth anniversary of the contract.
Significant accretion to DPU
The acquisition of the two crude oil tankers will be significantly and immediately accretive to FSL Trust's distribution per unit ("DPU"). Assuming no change in the equity structure of FSL Trust and after deducting estimated incentive fees attributable to the Trustee-Manager, the acquisition is projected to generate an additional DPU of US0.16 cent for the quarter ending 30 June 2008, and an additional DPU of US0.28 cent for each full calendar quarter thereafter.
Rationale for the acquisition
Mr Philip Clausius, Chief Executive Officer of FSLTM, said: "We are very pleased to have entered into this agreement with Geden, Turkey's largest shipping company. Apart from diversifying our customer base further, we are also entering a new market segment through the acquisition of our first crude oil tankers.
"This US$140 million transaction brings our total asset acquisitions to US$298 million in just over a year since our listing in March 2007. Its size is obviously very meaningful in the context of our acquisition target of US$300 million for FY 2008, which we continue to be very confident of meeting. Equally important, we are delighted to again be able to deliver very substantial and immediate DPU accretion to our unitholders. The acquisition will raise the projected quarterly DPU by 11.6% compared to the US2.42 cent distributed for the last quarter of 2007."
Funding
The acquisition of the two ships was fully funded upon closing by drawing from FSL Trust's two revolving credit lines which are each arranged by The Bank of Tokyo-Mitsubishi UFJ Co., Ltd., Singapore Branch and Bayerische Hypo- und Vereinsbank AG, Singapore Branch. These facilities are provided on a floating rate basis, which for this transaction provide a substantially natural hedge for the floating rate lease income. After the funding of this transaction, the undrawn portion of FSL Trust's credit facilities is about US$150 million.
The two vessels acquired in this transaction, namely 'Aqua' and 'Action', are high quality crude oil tankers of the "Aframax" class with a carrying capacity of about 115,000 dwt each. Built by Samsung Heavy Industries in South Korea, 'Aqua' was delivered in June 2007 and 'Action' in November 2007.
Since their deliveries the vessels have and will continue to be employed on three-year time charters with NYSE-listed and US-based Overseas Shipholding Group, Inc., trading predominantly in the Atlantic/Caribbean market.
Classed with Det Norske Veritas and flying the Malta flag, FSL Trust owns the vessels through two Singapore special purpose companies.
From its initial portfolio of 13 vessels at listing, FSL Trust now has a portfolio of 20 vessels comprising four containerships, nine product tankers, three chemical tankers, two dry bulk carriers and two crude oil tankers.
First Ship Lease Trust is a provider of leasing services on a bareboat charter basis to the international shipping industry. It has a modern, high quality and diverse portfolio of 20 vessels consisting of four containerships, nine product tankers, three chemical tankers, two dry bulk carriers and two crude oil tankers. These vessels have an average age of approximately four years, and an average remaining lease period of approximately nine years (excluding extension periods and early buy-out options).
FSL Trust is listed on the Singapore Exchange Securities Trading Limited and is managed by FSL Trust Management Pte. Ltd. ("FSLTM"), the trustee- manager. FSLTM is focused on rapidly growing the vessel portfolio of FSL Trust through accretive acquisitions with long-term bareboat charters. It has an acquisition target of US$300 million for FY 2008.
Significant accretion to DPU
The acquisition of the two crude oil tankers will be significantly and immediately accretive to FSL Trust's distribution per unit ("DPU"). Assuming no change in the equity structure of FSL Trust and after deducting estimated incentive fees attributable to the Trustee-Manager, the acquisition is projected to generate an additional DPU of US0.16 cent for the quarter ending 30 June 2008, and an additional DPU of US0.28 cent for each full calendar quarter thereafter.
Rationale for the acquisition
Mr Philip Clausius, Chief Executive Officer of FSLTM, said: "We are very pleased to have entered into this agreement with Geden, Turkey's largest shipping company. Apart from diversifying our customer base further, we are also entering a new market segment through the acquisition of our first crude oil tankers.
"This US$140 million transaction brings our total asset acquisitions to US$298 million in just over a year since our listing in March 2007. Its size is obviously very meaningful in the context of our acquisition target of US$300 million for FY 2008, which we continue to be very confident of meeting. Equally important, we are delighted to again be able to deliver very substantial and immediate DPU accretion to our unitholders. The acquisition will raise the projected quarterly DPU by 11.6% compared to the US2.42 cent distributed for the last quarter of 2007."
Funding
The acquisition of the two ships was fully funded upon closing by drawing from FSL Trust's two revolving credit lines which are each arranged by The Bank of Tokyo-Mitsubishi UFJ Co., Ltd., Singapore Branch and Bayerische Hypo- und Vereinsbank AG, Singapore Branch. These facilities are provided on a floating rate basis, which for this transaction provide a substantially natural hedge for the floating rate lease income. After the funding of this transaction, the undrawn portion of FSL Trust's credit facilities is about US$150 million.
The two vessels acquired in this transaction, namely 'Aqua' and 'Action', are high quality crude oil tankers of the "Aframax" class with a carrying capacity of about 115,000 dwt each. Built by Samsung Heavy Industries in South Korea, 'Aqua' was delivered in June 2007 and 'Action' in November 2007.
Since their deliveries the vessels have and will continue to be employed on three-year time charters with NYSE-listed and US-based Overseas Shipholding Group, Inc., trading predominantly in the Atlantic/Caribbean market.
Classed with Det Norske Veritas and flying the Malta flag, FSL Trust owns the vessels through two Singapore special purpose companies.
From its initial portfolio of 13 vessels at listing, FSL Trust now has a portfolio of 20 vessels comprising four containerships, nine product tankers, three chemical tankers, two dry bulk carriers and two crude oil tankers.
First Ship Lease Trust is a provider of leasing services on a bareboat charter basis to the international shipping industry. It has a modern, high quality and diverse portfolio of 20 vessels consisting of four containerships, nine product tankers, three chemical tankers, two dry bulk carriers and two crude oil tankers. These vessels have an average age of approximately four years, and an average remaining lease period of approximately nine years (excluding extension periods and early buy-out options).
FSL Trust is listed on the Singapore Exchange Securities Trading Limited and is managed by FSL Trust Management Pte. Ltd. ("FSLTM"), the trustee- manager. FSLTM is focused on rapidly growing the vessel portfolio of FSL Trust through accretive acquisitions with long-term bareboat charters. It has an acquisition target of US$300 million for FY 2008.