First Ship Lease Trust secures $479.6 million amortizing loan due 2017

By Marisa Wong

Madison, Wis., Dec. 1 - FSL Trust Management Pte. Ltd., the trustee-manager of First Ship Lease Trust, entered into a loan agreement for a $479.6 million six-year amortizing term loan on Thursday, according to a company news release.

The new facility will be used to refinance First Ship's existing revolving credit facility, which has an outstanding balance of $483.1 million. The remaining $3.5 million of the revolver will be repaid in cash from the trust's internal funds.

The new term loan is secured against the Singapore-based shipping trust's current portfolio of 25 vessels.

The trust will make quarterly loan repayments of $11 million. The drawdown of the loan is expected to occur before the end of the current fiscal year.

Interest will be Libor plus a margin of 260 basis points to 300 bps, depending on the company's security-to-loan valuation. The margin will be 260 bps if the valuation is greater than 180%, 280 bps if the valuation is 140% to 180% and 3% if the valuation is 125% to 140%.

According to the release, the loan agreement is subject to the following terms:

• The trust's debt-service coverage ratio must be at least 1.1 to 1 during the term of the facility. If the ratio falls below the threshold of 1.15 to 1, all distributions to unitholders will cease;

• The trust has to maintain a minimum cash balance of $15 million during the term of the facility; and

• Unitholders' equity must exceed 30% of the trust's total assets during the term of the facility.

The trust is also required to ensure that the valuation of its vessels is at least 125% of the value of the outstanding loan. This is an improvement over the security-to-loan valuation of 145% under the trust's current facility, the release said.

ABN Amro Bank NV, Singapore Branch and Oversea-Chinese Banking Corp. Ltd. are the lead arrangers and bookrunners for the new facility. The other lead arrangers are Bank of Tokyo-Mitsubishi UFJ Co., Ltd., UniCredit Bank AG, Singapore Branch, Sumitomo Mitsui Banking Corp., Singapore Branch, Korea Development Bank, ITF International Transport Finance Suisse AG and KfW IPEX-Bank GmbH. Bank of Tokyo and UniCredit are the facility agent and security trustee, respectively.

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