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May 3, 2010

Charterers seek to return two ships to FSL Trust

Groda Shipping affiliates have asked Singapore's First Ship Lease Trust to take redelivery of two products tankers, saying that they do not do not intend to continue to make full lease payments under the lease charter agreements.

FSL Trust currently leases the two product tankers, Verona I and Nika I, each under a seven year base term bareboat charter to the charterers until November 2014. Under the lease charter agreement, the bareboat charter rate of each vessel is fixed at $20,700 per day and the charterers are obligated to pay FSL Trust the lease rental in full on a monthly basis in advance.

According to a Singapore Stock Exchange announcement, for the month of May 2010, the charterers have made full payment for Nika I but not for Verona I

FSL Trust Management Pte Ltd (FSLTM), Trustee-Manager of First Ship Lease Trust, says that it has been informed by Groda Shipping that from June 2010 onwards, full payments should not be expected for either vessel.

The lease charter agreements are structured with credit enhancement features. Most significant are a cash security deposit of $3 million per vessel and an assignment of the long-term Contract of Affreightment between the charterers and Russia's state-controlled Rosneft Oil Company. Both vessels continue to be employed under the COA.

FSLTM says best efforts will be made to ensure the uninterrupted operation of the vessels. FSLTM is currently in discussions with Groda Shipping and exploring available legal and commercial options. FSLTM will evaluate all options with a view to safeguarding the interests of unitholders of FSL Trust.


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