Shares & Derivatives
Sustainability of First Ship Lease Trust’s Cashflows
By (The) Boring Investor  •  May 14, 2017
Last week, I blogged about the estimated current valuation of First Ship Lease Trust (FSL) and mentioned that since the current market value of the ships exceeds the loan amount, the probability of successful refinancing is quite high. However, the more important factor in determining successful refinancing is whether future cashflows are sufficient to meet the loan obligations. In this post, I will estimate the future cashflows of FSL and determine whether it is a viable business going forward. For FSL to be viable, its cash inflows must be sufficient to cover its cash outflows. On a Bare Boat Charter Equivalent (BBCE) basis, the annual cash inflow must be able to cover the trust's operating expenses, loan principal repayment and interest expenses. For FY2016, the trust operating expenses (comprising management fees, trustee fees and other trust expenses) amount to USD4.8M, loan principal repayment is USD42.7M (excluding early repayment) ......
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By (The) Boring Investor
nvestor, Engineer, Photographer, Blogger, Friend and Son.
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