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 says Singapore-based First Ship Lease Trust's (FSLT) rating is not affected 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 of its bank debt and also avail new liquidity and savings from its restructured time charter book. This restructuring would result in FSLT receiving lower lease rentals from TORM and also a share of the 17.3% equity stake in TORM's enlarged share capital held by tonnage providers who have agreed to permanently amend their charter contracts.

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