FSL – BT

FSLT cuts Q3 distribution by 47.8%

FIRST Ship Lease Trust (FSLT) continued to adopt a prudent approach amid the global shipping downturn, slashing its third-quarter distribution to unitholders by 47.8 per cent year-on-year to US$7.96 million. This resulted in a distribution per unit of 1.5 US cents, in line with its guidance. In Q3 2008, DPU was 3.05 US cents.

Based on the equity placement announced on Sept 4, 80 million new units were issued on Sept 17 and a stub distribution of 1.27 US cents was declared for the period July 1 to Sept 16 for the then existing unitholders. The enlarged unitholder base post-equity placement will receive the remaining DPU of 0.23 US cent for the period Sept 17 to Sept 30.

Net cash from operations for the third quarter rose 11.5 per cent year-on-year to US$17.6 million. The lower distribution amount resulted in surplus cash of US$9.6 million, of which US$8 million has been applied towards voluntary loan prepayments on Sept 18 (US$800,000) and Oct 1 (US$7.2 million) respectively, FSLT said.

‘FSLT’s business is robust and has continued to deliver stable and predictable cash flows as the global shipping industry navigates through this challenging period,’ said Philip Clausius, CEO of the trustee-manager FSL Trust Management.

FSLT’s lease revenue rose 4 per cent to US$24.6 million, compared to Q3 2008, primarily driven by contributions from YM Enhancer, the third and final containership acquired in October last year, in the acquisition and leaseback transaction with Yang Ming Marine Transport Corporation.

FSLT reiterated that there has been no attempt by any lessee to re-negotiate lease terms and all lease rentals have been received promptly, including the rentals for October.

Management has provided a DPU guidance of 1.50 US cents for Q4, representing an annualised yield of about 14 per cent based on the closing price of 60.5 Singapore cents on Oct 22.