First Ship Lease Trust

[wonghw12]

As suspected, fsl has trouble getting refinancing. This dragged for way too long. My best guess is the global environment is different from before. With the majority of the shipping and O&G industry doing badly, bank need to strengthen their balance sheet.

The other alternative would be dilution of shareholders stake. I suspect that even the recently announcrd convertible loan interest rates may not be favourable.

Lastly, shareholders counting on the balance sheet value of vessels should take note that the record value is based on discounted cash flow projected by fsl. This was mentioned by the ceo during one of the calls. That's why there are impairments when their clients defaults at higher rates. In addition, should someone else buy vessels, they will buy at a discount to projected cash flow in order to profit and mitigate risk. With poor refinancing available and unfavourable shipping rates, one would expect rather substantial discount to fsl asset value.

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Was there a discussion about the sale of vessels in the scenario that FSL is unable to obtain financing? Seems quite drastic that minority shareholders would be diluted very heavily.