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FSL Trust buys secondhand MR tanker for $21.8m in cash

FSL Trust buys secondhand MR tanker for $21.8m in cash
First Ship Lease Trust (FSL Trust) has entered into an agreement to buy a 2007-built MR product tanker for $21.8m for deployment in the spot market.

The Japanese-built, 45,998-dwt tanker is slated to be delivered to FSL Trust between 1 November 2015 to 31 January 2016.

The acquisition will be financed through existing cash reserves that totalled $41.8m as at 30 June 2015, according to FSL Trust Management (FSLTM), the trustee-manager of FSL Trust.

The product tanker is projected to deliver an annual cash-on-cash yield of 14.5% based on a conservative time-charter equivalent of $16,500 per day over the next three years.

Upon delivery of the vessel, FSL Trust’s fleet will stand at 24 vessels comprising seven containerships, 12 product tankers, three chemical tankers and two crude oil tankers.

Alan Hatton, ceo of FSLTM, said the acquisition “demonstrates the ongoing execution of our strategy, outlined earlier this year, to renew the fleet and generate incremental revenue ahead of the scheduled redelivery in 2016 of the panamax containership vessels, currently on bareboat charter to Evergreen.”

He continued: “The acquisition will be entirely cash-financed. This is possible due to strengthened cash generation in the Trust resulting from the improved deployment of redelivered vessels and by attaining new time charters with quality counterparties at higher rates.”

Hatton believed that MR tankers of this age and type provide a strong yield for its unitholders.

In July this year, Singapore-listed FSL Trust secured new time charter agreements worth up to $61m over the next three years for three aframax crude oil tankers. In April, it announced a two-year time charter agreement with a US domestic oil firm for a crude oil tanker.