FSL renegotiates terms for TORM product tankers

FIRST Ship Lease Trust (FSL Trust) has renegotiated charter terms for two product tankers, TORM Margrethe and TORM Marie, which were leased to a wholly owned subsidiary of Denmark’s TORM.

The new terms state that the bareboat charter rates for the two vessels will be realigned to the variable rates TORM achieves in the market. In exchange for the rate concessions, FSL will be allocated equity in TORM, FSL said.

The original bareboat agreements also had early buyout, purchase and lease extension options, but these will be cancelled under the new terms.

In addition, should the actual rates achieved by TORM for the vessels underperform the market benchmark by a pre-agreed, semi-annually tested margin, FSL will have the right to terminate the charters.

TORM said earlier this month that the company had reached a conditional agreement with the coordination committee of its banks regarding a deferral of instalments and a covenant standstill on its ship financing until the end of this month.

Due to the carrier’s current financial difficulties, it had also been in talks with its time charter partners to provide a long-term financing solution to its problems by amending its charter-in agreements.

Despite the amended terms, FSL said assured investors that it did not expect any material impact on the net tangible assets per unit of the trust for the current financial year.

The new terms are subject to consent from FSL’s lenders. ‘While some lenders have already given their consent, formal approval is still pending,’ said FSL.

Units in the trust closed 0.5 cent up at 22 cents yesterday.

Posted in FSL