FSL Trust's manager hit by shock resignations

PHOTO: FSL Trust's manager hit by shock resignations

SINGAPORE - Four shock resignations have left First Ship Lease (FSL) Trust's trustee manager without its chairman, chief executive, chief financial officer and another director.

This was announced in filings made by the Singapore-listed shipping trust on the Singapore Stock Exchange on Thursday.

The board is now left with only four members.

FSL Trust owns ships that it leases out.

Last month, amid tough industry conditions, the trust demanded the return of two tankers after two subsidiaries of a Turkish company missed lease payments.

The trust has also been in talks with its lenders over relaxing the terms of its debt repayments.

It said on Thursday that chairman and independent director Wong Meng Meng, 65, and independent director Phang Thim Fatt, 56, had resigned after "differences in opinion in respect of the conduct of a board meeting".

In the case of executive directors Philip Clausius, 44, and Cheong Chee Tham, 48, it cited a slightly different reason for their departure: "differences in opinion in respect of the management of FSL Trust and FSL Trust Management (the trustee-manager)".

Mr Clausius was also chief executive of FSL Trust's trustee manager and Mr Cheong was its chief financial officer.

A spokesman for the trustee- manager on Thursday declined to comment on the exact nature of the disagreements.

It is unclear when the key posts will be filled.

The shock departures have already alarmed Standard & Poor's (S&P) Ratings Services.

It lowered its long-term corporate credit rating on FSL Trust to B from B+ on Thursday. It also lowered its long-term ASEAN regional scale rating on the trust to axB+ from axBB-.

The ratings were placed on credit watch with negative implications.

S&P also cited the recent relaxation of FSL Trust's loan covenants as it revised its assessment of the trust's liquidity to "less than adequate" from "adequate".

"In view of the challenging industry conditions and weakening credit profile of FSL's lessees, the sudden change in management may adversely affect the company's business. FSL's lenders are also likely to review the covenant relaxation, which is conditional on continuation of the company's management. We revised our liquidity assessment because the company is not in compliance with its covenants as of June 30," it said in a statement on Thursday.

The trustee-manager had recently been adding members to its board, and it is unclear if the additions are somehow linked to the mass resignations.

Mr Michael Oliver, 64, joined as independent director just last Wednesday.

Also, independent director Simon Davidson, 53, and nonexecutive director Timothy Reid, were both added on June 17.

Mr Oliver and Mr Davidson had both been invited to the board by shipping finance firm FSL Holdings, the sponsor of FSL Trust. Mr Reid is a director of FSL Holdings.

The departures at FSL Trust and relaxation of loan covenants came amid the news that it had failed to receive lease payments on two crude oil tankers.

Last month, FSL Trust said it wanted the two tankers returned, after two subsidiaries of Turkey's Geden Holdings failed to make the lease payments.

Trading of FSL Trust's units had been halted since Monday, and the trading halt was on Thursday converted to a suspension.

There had been no announcement on the resumption of trading by 7pm on Thursday.

The stock last changed hands at 10.7 cents last Friday.

jonkwok@sph.com.sg


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