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FSL Trust eyes $21m from vessel sales to fund newbuildings

FSL Trust is aiming to raise up to $21.3m from the sale of its existing ageing vessels to help pay for two new LR2 tankers recently ordered at a Cosco shipyard in China.

Last week, Singapore-listed FSL Trust signed a letter of intent with Cosco Shipping Heavy Industry (Yangzhou) Co for two LR2 product tankers at a total price of $97.6m.

FSL Trust said the intention to sell off its ageing vessels is not expected to require unitholders’ approval as disposals are part of fleet management in its ordinary course of business.

It added that “no definitive documentation has been entered into in relation to the contemplated sales.”

FSL Trust detailed that the $97.6m newbuilding deal is expected to be funded by up to $31m in net proceeds of a preferential offering, $21.3m from sales of ageing vessels, and remaining balance by way of a combination of surplus cash flows and bank financing.

“It is expected that the bank financing, of between 50% to 70% of the aggregate consideration for the newbuilding acquisition, will only need to be made available on or around late 2020 and early 2021 when the new vessels are expected to be delivered respectively,” FSL Trust said.

Read more: FSL Trust buys LR2 tanker pair for $97m at Cosco yard

The new 114,000-dwt LR2 tankers will be fitted with scrubbers and they are expected to enhance the fleet commercial attractiveness and marketability for FSL Trust.

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