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FSL Trust
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BT, Published March 20, 2007

FSL's IPO makes it S'pore's biggest business trust

It will raise over US$215m from 220m shares at 98 US cents each

(SINGAPORE) First Ship Lease Trust (FSL), which acquires and leases shipping assets, is seeking an SGX-listing that will make it the third and largest business trust on the local bourse by market capitalisation. The trust is raising over US$215 million from an offer of 220 million shares at 98 US cents each, and will achieve a market cap of some US$490 million at this price.

FSL will channel the IPO proceeds into acquiring 13 vessels, including container ships, tankers and dry bulk carriers. These are on long-term lease to five customers, with an average remaining lease term of about nine years.

The size of the public offer is seven million units, or just over 3 per cent of the total offering. Another 213 million shares will be privately placed, with an over-allotment option for another 34 million units. If this is fully exercised, public and institutional investors will own 51 per cent of FSL after the offering, with sponsor First Ship Lease owning a quarter of the trust. The remainder will be held by three cornerstone investors.

The trust is promising investors a projected tax-free annualised distribution yield of 8.69 per cent, based on the issue price. To protect this yield, the trust has a unique subordination structure, under which the sponsor will subordinate half of its dividend entitlement and the manager will subordinate 100 per cent of fees to a target dividend. It has also subordinated the dividend entitlement and management fees to minimum distribution targets running through to the first half of 2009. According to these targets, the annualised dividend yield will grow to 10 per cent of the offering price for the 1H09.

FSL targets acquisitions worth US$200 million annually, at average asset yields of 10.5 per cent. It will be debt-free on the listing date, but has a target debt-equity ratio of 1:1, which means it has debt capacity for an extra US$400 million, said Philip Clausius, CEO of FSL Trust Management.

It already has in place a debt facility of US$250 million, so FSLT 'is not at the mercy of equity markets when raising funds for growth', he said.

Mr Clausius, who founded the sponsor First Ship Lease before the trust was structured, said its business model shields investors from ship-operating risk and from the shipping cycle. The trust leases ships on bareboat charter, which means the lessees are responsible for outfitting and running them. It only acquires ships with a lease in place, and as the charters are made on a long-term basis, the trust and its investors are protected from short-term shipping cycle fluctuations, as long as the lessee is robust.

'At bottom, we are booking long-term annuities with customers that we deem creditworthy. The substantial risk that the trust has is customer default - there is no more important decision than who we are going to lease an asset to,' Mr Clausius said.

Are potential acquisitions then subject to risks from fluctuations in freight rates? Again, Mr Clausius said no. If freight rates decline, then the asset price will decline, so that even though the absolute income goes down, asset yield remains stable.

The sponsor's shareholders - commercial and maritime banks HSH Nordbank and HVB, and ship management firm Schoeller Holdings - also help to reduce risk and provide acquisition opportunities for growth, he said. Schoeller owns Columbia Shipmanagement, which will provide FSL the technical expertise it needs to evaluate shipping assets. It can also operate assets that FSL is forced to take back in case of customer default. HSH and HVB are 'large players in ship mortgage financing markets' with whom FSL is 'largely serving a similar target customer base but offering different financing options'. FSL can leverage their sales forces and contacts to originate transactions, Mr Clausius said, while the banks benefit by having an extra option to offer clients.

FSL's offer opened yesterday evening and closes at noon on March 22.



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BT, March 19, 2007, 1.35 pm (Singapore time)

First Ship trust prices IPO at US$0.98

SINGAPORE - First Ship Lease, a ship leasing and financing company, has priced its Singapore initial public offering of a shipping trust in at US$0.98 a unit, near the upper end of the indicative price range.

The company is offering 220 million units to investors. Sources said earlier that the indicative price range was US$0.92 to US$1.00.

FSL Trust will be Singapore's second shipping trust, following last May's listing of Pacific Shipping Trust, which is backed by Singapore's second-biggest shipping firm, Pacific International Lines.

J.P. Morgan and Deutsche Bank are lead arrangers for the First Ship Lease IPO. -- REUTERS

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BT, February 23, 2007, 10.45 am (Singapore time)

First Ship prices IPO at US$0.92-US$1.00

SINGAPORE - First Ship Lease, a privately-held ship leasing and financing company, is planning to sell units in a trust to be listed in Singapore at an indicative price range of US$0.92 to US$1.00, a source close to the deal said on Friday. Based on that price range, the trust would have an indicative yield of 8.5 to 9.25 per cent, the source said.

The firm started its roadshow on Friday and pricing is expected around mid-March.

FSL Trust will be Singapore's second shipping trust, following the listing last May of Pacific Shipping Trust which is backed by Singapore's second-biggest shipping firm, Pacific International Lines.

First Ship Lease provides financing to shipping and industrial companies. Its shareholders include Germany's HSH Nordbank, the world's biggest ship financier, and German bank HVB Group.

Vessels in the FSL Trust portfolio include chemical tankers as well as container ships. -- REUTERS

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BT, February 14, 2007, 7.22 pm (Singapore time)

First Ship Singapore trust to yield up to 9.25%: source

SINGAPORE - First Ship Lease, a privately held ship leasing and financing company, plans to list a trust in Singapore based on ships at an indicative yield of 8.5 to 9.25 per cent, a source close to the deal said on Wednesday. The trust will be launched this week and is expected to be priced by the middle of March, the source told Reuters on condition of anonymity. The trust may raise up to US$350 million and is based on a portfolio of 13 vessels, according to banking sources.

FSL Trust will be Singapore's second shipping trust, following the listing last May of Pacific Shipping Trust which is backed by Singapore's second-biggest shipping firm, Pacific International Lines. First Ship Lease provides financing to shipping and industrial companies. Its shareholders include Germany's HSH Nordbank, the world's biggest ship financier, and German bank HVB Group. Vessels in the FSL Trust portfolio include chemical tankers as well as container ships.

JP Morgan and Deutsche Bank are lead arrangers. -- REUTERS

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