FSL Trust said it is “extremely concerned” over a security clause granting lenders shares in the companies holding vessels owned by FSL Trust, as well as a provision that gives the right for lenders to review the loan relaxations in the event of the departures of two or more high-level executives.
“The current board of FSL Trust Management (FSLTM) has taken independent legal advice on this matter and will further investigate the negotiations that led to the extension and the enforceability of the above-mentioned condition requiring the creation of the security,” the company said.
The relaxation of the loan covenants is due to expire on 31 December 2013.
FSL Trust said the board has communicated this matter to the lenders and also indicated to them that it would consider granting the security as part of new mutually agreed covenant relaxations to be overseen by the current board.
“However, as the security has not been provided to the lenders, this condition to the extension has not been met, in which event FSL Trust would not be able to meet certain financial covenants and this may result in an event of default that would entitle the lenders the right to accelerate the loan,” the company said.
“Separately, the current board of FSLTM has also become aware of an adjusting post-balance sheet event, which may result in the Trust not being able to comply with one of the financial covenants under the relaxed terms of the extension, which may also result in an event of default that would entitle the lenders the right to accelerate the loan.”
FSL Trust has requested a trading halt from Friday “pending announcement to clarify lenders' position in relation to a covenent waiver or relaxation for 30 September 2013.”
Between July to October this year, several senior executives of FSL Trust including president and ceo Philip Clausius, senior vice president and cfo Chong Chee Tham, chairman and director Wong Meng Meng, and senior vice president and chief commercial officer Vijay Kamath, tendered their resignations.
Meanwhile, Singapore-listed FSL Trust posted a third quarter net loss of $8.93m, deepening from a loss of $186,000 in the same period of last year. Revenue fell 16% year-on-year to $22.46m.
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