TEXT-Fitch: First Ship Lease Trust's Rating Unaffected by TORM Restructuring


(The following was released by the rating agency)

SINGAPORE, October 11 (Fitch) Fitch Ratings saysSingapore-based First Ship Lease Trust's (FSLT) rating is notaffected by a restructuring agreement of one of its lessees,Denmark-based TORM A/S, with its banks and tonnage providers(including FSLT). FSLT is rated Long-Term Issuer Default 'B+'with Negative Outlook.

Under the agreement TORM will defer a substantial portion ofits bank debt and also avail new liquidity and savings from itsrestructured time charter book. This restructuring would resultin FSLT receiving lower lease rentals from TORM and also a shareof the 17.3% equity stake in TORM's enlarged share capital heldby tonnage providers who have agreed to permanently amend theircharter contracts.

Despite the lower lease rentals Fitch estimates that in theabsence of further defaults or restructuring by TORM, FSLT'sprojected operating cash flows and USD30.8m cash balanceoutstanding as of 30 June 2012 would be adequate to meet itsoperating expenses and USD44m annual debt servicing commitments.Nevertheless, given the negative outlook for the global shippingindustry, Fitch will closely monitor FSLT's portfolio qualityand its impact on the credit profile.