FSL – BT

Q4 distribution per unit halves at First Ship Lease Trust

1.5 US cent payout unchanged from preceding quarter’s

FIRST Ship Lease Trust (FSLT) has declared a fourth-quarter distribution per unit (DPU) of 1.5 US cents, unchanged from that of the preceding quarter but down by half from 3.08 US cents a year ago. For the full year of 2009, DPU came to 7.9 US cents per unit, down nearly a third from the year before.

Q4’s distribution amount of US$9 million was 42 per cent lower while FY09 total distribution dropped by just over a quarter to US$42 million. The retained cash from the lower distribution payout was mainly used for voluntary debt prepayment as well as for scheduled loan amortisation following the credit facility amendment.

Net cash generated from operations grew 15 per cent to US$67.9 million for FY09 from US$59.1 million for FY08, due to the full-year impact of the acquisition of five vessels between April and October 2008. For Q4, net cash generated was flat at US$16.2 million.

‘2009 proved to be the most difficult year for the global shipping industry since the mid 1980s,’ said Philip Clausius, CEO of FSLT trustee-manager, FSL Trust Management.

‘2010, however, started on a significantly more positive note: major container liner companies, following various successful freight rate restoration efforts and capacity reductions, are at or close to cashflow breakeven levels; the tanker freight market is enjoying a mini-bull run with current rates at 12-month highs; the dry bulk market has come off somewhat but is still well above long-term historical averages,’ he added.

Lease revenue for Q409 fell 4.6 per cent from Q408 to US$24.5 million, mainly due to lower lease payments received from two vessels leased to Geden Lines. The Geden leases are pegged to the US dollar three-month Libor and reset on a quarterly basis and this has plunged compared to the previous year.

Looking ahead, FSLT expects its lease portfolio to continue to deliver predictable and stable cashflow. FSLTM has indicated that Q1FY10 DPU would remain at 1.5 US cents, representing an annualised yield of about 14 per cent based on yesterday’s closing price of 60 cents.

The distribution for Q4FY09 will be paid on March 1.