Scorpio Tankers Inc. (NYSE: STNG) reports that it has acquired subsidiaries of Trafigura Maritime Logistics Pte. Ltd., a wholly-owned subsidiary of Trafigura Group Pte Ltd, that have leasehold interests in 15 Medium Range (MR) product tankers and four LR2 product tankers. Scorpio Tankers will assume the present value of the finance lease arrangement of approximately $668 million and issue approximately 4.7 million shares at $29.00 per share to Trafigura for an aggregate market value of approximately $135 million. These shares will be subject to a customary lock-up through the end of 2019.
Scorpio Tankers also announced today private placements with Trafigura for $35 million and Scorpio Services Holding Ltd., a related party, for $15 million for an aggregate total of $50 million or 1,724,137 shares at $29.00 per share.
Following the closing of both transactions, expected before September 27, 2019, Trafigura will own approximately 10 percent of the ordinary shares of Scorpio Tankers.
The new-build super-eco vessels constructed by Hyundai Vinashin and New Times shipyards, are all fitted with exhaust gas cleaning systems operating with a potential significant competitive cost advantage in the changing oil and freight markets.
Emanuele A. Lauro, Chief Executive Officer of Scorpio Tankers Inc. commented:
“This transaction represents a close alignment between Scorpio and Trafigura, a strategic customer and now a valued shareholder. We share common beliefs in quality assets, quality service, and most importantly, the favorable fundamentals currently unfolding in the product tanker market. This fleet of 19 ultra-modern product tankers is a singular opportunity in an otherwise diminished global order book. The average age of our fleet will be reducing (from 4.1 to 3.7 years) and our fuel efficiency increasing. At the same time, IMO 2020 and other demand drivers are set to increase ton-mile demand significantly over the coming months. In addition to Trafigura being a longstanding customer, its investment in Scorpio Tankers represents a new stage in our partnership which we believe will serve all our shareholders and stakeholders well.”
Rasmus Bach Nielsen, Global Head of Wet Freight at Trafigura commented:
“Trafigura enjoys a close working relationship with Scorpio Tankers, a company that we consider to be very well run. Today’s decision completes a strategic decision to crystalize financial benefits now and to move long term leasing obligations into leading shipping equities, a place where we see significantly more value and upside potential in the period ahead.
“We are delighted that through these agreements Trafigura has become a significant shareholder in Scorpio Tankers. In our view, minimal supply growth and an expected demand spike through oil market disruption and bunkering inefficiencies, are making product tanker market fundamentals look healthier than we’ve seen for many years.”
Clarksons Platou Securities AS acted as sole financial advisor to Trafigura.
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. On delivery to Scorpio, all the 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.
The fleet list is as follows:
|Vessel Name||Shipyard||Vessel Class||Construction/ Delivery Date|
|Marlin Lobelia||New Times Shipbuilding||LR2||Jan-2019|
|Marlin Lotus||New Times Shipbuilding||LR2||Jan-2019|
|Marlin Lily||New Times Shipbuilding||LR2||Jan-2019|
|Marlin Lavender||New Times Shipbuilding||LR2||Feb-2019|
|Marlin Magic||Hyundai Vinashin||MR||Jan-2019|
|Marlin Majestic||Hyundai Vinashin||MR||Jan-2019|
|Marlin Mystery||Hyundai Vinashin||MR||Feb-2019|
|Marlin Marvel||Hyundai Vinashin||MR||Mar-2019|
|Marlin Magnetic||Hyundai Vinashin||MR||Mar-2019|
|Marlin Millennial||Hyundai Vinashin||MR||May-2019|
|Marlin Master||Hyundai Vinashin||MR||Jun-2019|
|Marlin Mythic||Hyundai Vinashin||MR||Jul-2019|
|Marlin Marshall||Hyundai Vinashin||MR||Jul-2019|
|Marlin Modest||Hyundai Vinashin||MR||Aug-2019|
|Marlin Maverick||Hyundai Vinashin||MR||Sep-2019|
|Marlin Miracle||Hyundai Vinashin||MR||Jan-2020 (est.)|
|Marlin Maestro||Hyundai Vinashin||MR||Jan-2020 (est.)|
|Marlin Mighty||Hyundai Vinashin||MR||Mar-2020 (est.)|
|Marlin Maximus||Hyundai Vinashin||MR||Sep-2020 (est.)|