Scorpio Tankers Inc. has agreed to acquire subsidiaries of Trafigura Maritime Logistics Pte. Ltd., which have leasehold interests in 19 product tankers, for an aggregate value of $803 million, the company said in its release.
The acquisition of the leasehold interest in the Vessels includes a finance lease arrangement with a financial institution under a bareboat contract arrangement. The aggregate value of the Vessels is $803 million, and after the assumption of the present value of the finance lease arrangement of approximately $668 million, the Company will issue approximately 4.7 million shares at $29.00 per share to Trafigura for an aggregate market value of approximately $135 million. The above-mentioned shares will be subject to a customary lock-up through December 31, 2019.
The Company also announced today private placements with Trafigura for $35 million and Scorpio Services Holding Ltd., a related party, for $15 million for an aggregate of $50 million or 1,724,137 shares at $29.00 per share.
Both transactions are expected to close before September 27, 2019.
The acquisition consists of leasehold interests in four LR2s and 15 MRs for a total of 19 product tankers. Fifteen of the vessels are currently on the water with an average age of 0.5 years, and the remaining four MR vessels will be delivered in 2020. Upon delivery to the Company, all Vessels will be fitted with exhaust gas cleaning systems, commonly known as scrubbers. The commercial and technical management of the Vessels will be transitioned to Scorpio Tankers following the closing of the transaction.
Under the terms of the finance lease arrangement, each of the Vessels will be bareboat chartered to one of the acquired companies pursuant to an eight-year charter that commenced, or will commence, upon delivery of the respective vessels. The Company will assume a principal balance of approximately $530 million for 15 vessels on the water and approximately $138 million for the four vessels under construction, or approximately $668 million in the aggregate. Charterhire under each bareboat charter will be comprised of (i) a fixed monthly payment and (ii) a variable monthly interest payment equal to the three-month LIBOR plus 3.5% of the remaining principal balance of the finance lease. The Company will have the option, but not the obligation, to purchase some or all of the vessels at intervals throughout the term of the arrangement.
BofA Merrill Lynch and RBC Capital Markets acted as financial advisors to Scorpio Tankers and Seward & Kissel LLP acted as legal counsel. Clarksons Platou Securities AS acted as financial advisor to Trafigura and Reed Smith LLP acted as legal counsel.
About Scorpio Tankers Inc.
Scorpio Tankers is a provider of marine transportation of petroleum products worldwide. The Company currently owns or finance leases 109 product tankers (38 LR2 tankers, 12 LR1 tankers, 45 MR tankers and 14 Handymax tankers) with an average age of 4.1 years and bareboat charters-in 10 product tankers (three MR tankers and seven Handymax tankers). These figures do not include the acquisition described above.