With well-rounded experience in banking and shipping under his belt, Alan Hatton was appointed CEO of First Ship Lease (FSL) Trust in August 2013 with the remit to restructure the Singapore-based business trust, which owns a fleet of vessels across major shipping sub-sectors.
Despite the headwinds faced by the global shipping industry over the past few years, Alan and his team have successfully brought FSL Trust back from a potential financial default.
By January 2015, within six quarters of his appointment, the Trust became compliant with its loan covenants, and has been restored to a sound financial footing. It has recorded eight consecutive profitable and cash-generative quarters and also managed to acquire a new MR tanker, FSL Osaka, on a fully cash-financed basis in November 2015, using cash generated since Alan’s appointment. This is a major milestone for the Trust — its first acquisition since 2011 — and comes after several years of financial issues.
FSL Trust has come a long way since Alan came on board. The CEO Magazine spoke to Alan about FSL Trust’s remarkable turnaround amid an uncertain and volatile global shipping market, and his strategies to enhance long-term performance of the Trust.
Navigating the storm
The Trust was set up as an asset management business to provide investors with a predictable yield in an asset class that hadn’t previously been used to provide steady income. At the time of the Trust’s listing on the Singapore stock exchange in 2007, deals were done at historically high levels both in terms of the value of the ships, the acquisition price of the ships, and also the rates that the ships were contracted out for. Alan explains that the Trust was built up to identify ships and counter parties, buy their ships, and then lease them back to them on a long-term contract; or what is termed ‘sale and leaseback structures’. It was envisioned that good, strong lease contracts would provide insulation from the cyclical and volatile shipping market.