Singapore-listed shipowner FSL Trust Management Pte. Ltd. (FSLTM) has entered into a memorandum of agreement to purchase a 2007, Japanese-built, 45,998-dwt MR product tanker for USD 21.8 million as it pushes to improve revenues by 2016.
The Trust said that it plans to finance the acquisition through existing cash reserves that totalled USD 41.8 million on 30 June 2015.
The vessel is expected to be delivered to the Trust between 1 November 2015 and 31 January 2016, and is intended to be employed in the spot market through a first class commercial manager.
FSLTM expects the acquisition to result in an annual cash-on-cash yield of 14.5% based on a conservative TCE of USD 16,500 per day over the next three years.
Commenting on the acquisition, Chief Executive Officer of FSLTM, Alan Hatton said, “MR product tanker sector is a sector we know well and where we have achieved good results this year, both with vessels in the spot market and, now, on time charter. Moreover, this 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.”
Underpinned by the continued improvement in the tanker market, the Trust recently secured new time charter agreements, worth up to USD 61 million over the next three years, for the Aframax crude oil tanker, FSL Shanghai and, MR product tankers, FSL Hamburg and FSL Singapore, with an unnamed commodities trader.
“The financial performance of the Trust has improved dramatically in no small part due to the very effective redeployment of the vessels that had been returned to the Trust from defaulting charter parties. The Board is committed to ensuring that projected revenue stream, expenses and principal loan repayments will allow sustained distributions to unitholders in the near future,” Tim Reid, Chairman of FSLTM added.
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.