FSL – BT

FSL Trust lands its first charter contract of the year

FIRST Ship Lease Trust (FSL Trust) has landed its first charter contract of the year with Brazilian oil major Petroleo Brasileiro (Petrobras).

FSL Singapore, a 47,470 deadweight-tonne (dwt) product tanker, will be on a three-year time-charter contract to Petrobras at a gross daily rate of US$14,000.

The vessel has been on spot charters since the middle of 2010, according to a company spokesperson.

The time-charter arrangement is new for FSL Trust, which has engaged in long-term bareboat charters before this, where boat lessees are responsible for all costs including crew and maintenance.

Under the new time-charter agreement, Petrobras will be liable for voyage costs such as fuel and port charges, while FSL Trust will be responsible for the operational costs of the vessel.

Removing FSL Singapore from spot market voyages is intended to reduce volatility in cash flow to FSL Trust.

The decision to engage in a time-charter agreement comes amid a major downturn in the shipping industry.

‘We believe that this (time-charter) arrangement will bring further stability to FSL Trust’s revenue stream, strengthen its resilience and diversify its customer base,’ said Vijay Kamath, senior vice-president and chief commercial officer of FSL Trust Management (FSLTM), trustee-manager of FSL Trust.

FY2011 was a rough year for FSL Trust, which suffered a net loss of US$17.1 million, almost three times the loss of US$5.7 million incurred in 2011.

Income available for distribution also fell by 30 per cent from US$26.0 million to US$18.3 million.

FSL Trust units closed trading unchanged yesterday at 21 cents.