FSL Trust has been in restructuring discussions with Geden since the end of 2012, but Geden has failed to pay the agreed lease payments due for the two 116,000 dwt tankers Aqua and Action, according to the shipping trust.
The Singapore-listed shipping trust believed it has technical and commercial management contingency plans in place for the vessels and intends to deploy the vessels in the spot market for the short term whilst exploring longer term employment options.
“In the current market environment, lease rates are expected to be lower than those contracted in the lease agreements with the lessees,” FSL Trust revealed.
It added that its vessel portfolio remains able to generate sufficient cash flows to satisfy the trust's principal and interest payments, barring unforeseen circumstances.
Last week, FSL Trust secured a further six months extension until 31 December 2013 on its loan covenants under a pact that the shipping trust pledge its vessels to the lenders.
The trust will be restricted from paying any distributions in 2013.
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