Published March 25, 2009

FSL Trust seeking mandate for buy-back of units

Move will allow purchase of up to 10% of issued units

By JAMIE LEE

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First Ship Lease Trust (FSL Trust) is seeking unitholders' approval for a unit buy-back mandate.

FSL Trust Management (FSLTM), the trustee-manager, said FSL Trust will hold an extraordinary general meeting (EGM) on April 8 for this purpose. The mandate would authorise the trustee-manager to buy back up to 10 per cent of the total number of issued FSL Trust units as at the date of the EGM.

A unit buy-back would cut the number of outstanding units in the market, resulting in a higher ownership stake per investor on the profits of the firm.

'The mandate is intended to provide FSLTM with a flexible and cost-effective tool of capital management that seeks to improve the net asset value per unit of FSL Trust and return on equity for unitholders,' the trustee-manager said.

Cheong Chee Tham, chief financial officer of FSLTM, said that the actual unit purchase, if any, would depend on the current market conditions, working capital requirements, the availability of financial resources and the expansion and investment plans of FSL Trust.

The trust would also hold its annual general meeting (AGM) on the same day to get approval for the renewal of general mandates for the issuance of new units. This includes units to be issued based on the FSL Trust distribution reinvestment scheme, under which unitholders can choose to receive their distributions in new units instead of cash or a combination of both.

'With reference to the general mandates for the issuance of new units, FSLTM currently has no plans to raise equity for FSL Trust,' said the trustee-manager.

It added that such mandates are 'regular resolutions' at AGMs and provide the trustee-manager greater flexibility to manage the trust's capital structure.