First Ship Lease Trust Saw Net Loss in 2012

FSL had lower rentals from vessels leased to TORM A/S

First Ship Least Trust (FSL) [SGX:D8DU] says it lost $8.4 million in 2012 on revenues of $106.1 million as a challenging market led to difficulties in payment for its lessees.

The revenues were down 4.2 percent from 2011, and the loss was lower than last year because of a $22.1 million impairment loss related to the redelivery of three chemical tankers recorded in 2011.

FSL said its earnings from long-term bareboat charters, its main business focus, fell 20.6 percent in the fourth quarter of 2012 to $18.7 million, mainly due to a payment default by subsidiaries of PT Berlian Laju Tanker (Berlian Laju) [BLTA:IJ] for three chemical tankers and lower rentals from vessels leased to TORM A/S (TORM) [NASDAQ:TRMD] resulting from a restructuring agreement.

Berlian Laju has been working to restructure a $1.9 million debt, and TORM announced the technical completion of its own restructuring in November 2012.

FSL said it is now in restructuring discussions with two lessees and expects the results to hurt its revenues in the first quarter of 2013, but it said it still expects to be able to honour its debt repayments.

"2012 has been very challenging, but the Trust's disciplined approach and wide network have helped to deploy our spot vessels to longer term arrangements within a relatively short time frame," said CEO Philip Clausius.

"This has enhanced our revenue visibility and improved our operational profile.

"However, the prolonged crisis has taken a toll on many shipping companies.

"We are cognizant of the pressures that some of our lessees are under as can be seen from the restructuring discussions we are currently having."

Clausius added that, while the industry outlook is uncertain and the market faces a record level of newbuilding deliveries, the company believes the industry is near or at the bottom of its down cycle.