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BLT subsidiaries default on lease obligations

Wednesday, 08 February 2012 | 00:00
FSL Trust Management Pte. Ltd. (“FSLTM”), as trustee-manager of First Ship Lease Trust (“FSL Trust”), wishes to announce that the lessees (the “Lessees”) of three chemical tankers, namely, Pertiwi, Prita Dewi and Pujawati (the “Vessels”), have defaulted on their lease payments under their respective lease agreements (the “Lease Agreements”) in February 2012. The Lessees are wholly-owned subsidiaries of PT Berlian Laju Tanker Tbk (“BLT”).
FSL Trust currently leases the Vessels, through special purpose companies (the “Vessel Owners”), under a 12-year bareboat charter each to the Lessees until 2018. Each Lessee is obliged to pay the relevant charter hire due under the relevant Lease Agreement on the first day of each calendar month. As of the date of this announcement, the Lessees have not made payment for the Vessels for the month of February 2012.
The obligations of the Lessees under the Lease Agreements are guaranteed by BLT pursuant to deeds of guarantee entered into between the respective Vessel Owners and BLT, the guarantor.
In view of the foregoing, the Vessel Owners have, by written notice to the Lessees in accordance with the terms of the relevant Lease Agreements, on 7 February 2012, declared the Lease Agreements to be in default, and have demanded payment by no later than 8 March 2012 for:
(i) the charter hire which fell due in February 2012;
(ii) the stipulated loss value, being the outstanding value of the unexpired term of the relevant lease (including the residual value of the relevant Vessel at the expiry of the relevant lease); and
(iii) default interest on the sums set out in paragraphs (i) and (ii) above.
The default would have a material impact on the net tangible assets (“NTA”) per unit of FSL Trust. Based on the financial statements announced for the year ended 31 December 2011, the NTA per unit is expected to decrease by US$0.03 from US$0.53 to US$0.50.
The Lessees’ contribution to FSL Trust’s total revenue for FY2011 was 12.8%. Nevertheless, barring unforeseen circumstances, the default by the Lessees will not cause FSL Trust to be unable to continue to service the debt obligations under its loan agreement.
As of 31 December 2011, FSL Trust’s existing portfolio of 20 vessels employed on long-term bareboat charters has a remaining contracted revenue of US$491.8 million and a dollar-weighted average remaining lease term of six years (excluding early buyout and extension options).
FSLTM is considering all options including, without limitation, repossessing the Vessels and enforcing the deeds of guarantees against BLT. Based on the current environment, alternative employment opportunities for the Vessels are available, albeit at lease rates lower than those contracted in the Lease Agreements. FSLTM already has technical and commercial management contingency plans in place.
For the month of February 2012, FSL Trust has received all the lease payments due from all other customers. FSLTM will make further announcements as and when there are material developments in this matter.
Source: FSLTM (First Ship Lease Trust Management)
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