Scorpio Tankers Inc. announces an agreement to issue shares in exchange for four MR product tankers under construction
Scorpio Tankers Inc. announced today that it has agreed with certain unaffiliated third parties to issue shares in exchange for the transfer of ownership to the Company of four MR product tankers currently under construction in South Korea. The newbuildings are expected to be delivered in the first and second quarters of 2014 and are similar to the Company's newbuildings that are also under construction at the same shipyard, the Company said in a press release.
The purchase price of the four vessels, in aggregate, is approximately $151 million. Approximately 30% of the consideration for the vessels will consist of newly issued common shares of the Company having a valuation based on the fair market value of the shares at the time of issuance. The new common shares will be issued to Ceres, Valero and a group of institutional investors advised by J.P. Morgan Asset Management; the remainder of the purchase price will be paid to the shipyard from cash-on-hand and bank debt.
The transaction also includes a time charter-out agreement for each of the four vessels for a fixed daily revenue amount at current market levels plus a profit sharing scheme whereby earnings in excess of the base time charter rate will be split between the Company and charterer, Valero. The first vessel delivered will be time chartered-out for a 24 month period, and the remaining three will each be time chartered-out for 12 month periods.
The transactions will be completed by way of novation of the existing shipbuilding agreements and remain subject to final documentation.
About Scorpio Tankers Inc.
Scorpio Tankers Inc. is a provider of marine transportation of petroleum products worldwide. Scorpio Tankers Inc. currently owns 18 tankers (one LR2 tanker, four LR1 tankers, one Handymax tanker, 11 MR tankers, and one post-Panamax tanker) with an average age of 4.0 years, time charters-in 29 product tankers (eight LR2, four LR1, eight MR and nine Handymax tankers), and has contracted for 64 newbuilding vessels (29 MR, 12 LR2, and 14 Handymax ice class-1A product tankers, and 9 VLGC), one of which is expected to be delivered to the Company by October 2013, 44 within 2014 and the remaining 19 by the end of 2015.