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FSL Trust obtains extension on loan covenants

Article-FSL Trust obtains extension on loan covenants

FSL Trust obtains extension on loan covenants
First Ship Lease Trust (FSL Trust) has secured a further six months extension on its loan covenants in a pact that saw the shipping trust pledge its vessels to the lenders.

Under the conditions of the extension until 31 December 2013, the shares of all the vessel-owning special purpose companies owned by FSL Trust will be pledged to the lenders.

During this period, the minimum security value-to-loan ratio is reduced to 100% and the debt service coverage ratio is relaxed to equal or greater than 1:1.

Singapore-listed FSL Trust said it expects to generate sufficient cash flows to service its quarterly loan amortisation of $11m as well as interest payments. It will prepay an additional $10m this quarter.

“We are pleased that our lenders have consented to extend the relaxation of two of our loan covenants as freight rates and vessel values have yet to make a significant recovery,” said Cheong Chee Tham, senior vice president and chief financial officer of FSL Trust.

“Although the trust is restricted from paying any distributions in 2013, this extension will allow us to focus our efforts on improving the financial position of the trust and preserving value for all unitholders.”

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