Scorpios in $1 billion buying binge

Robert Bugbee is President of both Scorpio Tankers and Scorpio Bulkers

DECEMBER 3, 2013 — Robert Bugbee led Scorpio Tankers Inc. (NYSE: STNG) and Scorpio Bulkers Inc. (OSLO-OTC: SALT) are continuing their buying binges, splashing out more than $1 billion on vessel acquisitions announced today.

Scorpio Tankers Inc. today announced that it has entered into agreements for the construction of seven Very Large Crude Carriers (‘VLCCs’) and entered into an agreement with an unaffiliated third party 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 company has reached agreements with Daewoo Shipbuilding and Marine Engineering Co., Ltd and Hyundai Samho Heavy Industries for the construction of seven VLCCs for an aggregate price of approximately $652.5 million. One vessel is scheduled for delivery in the third quarter of 2015, two in the fourth quarter of 2015, two in the first quarter of 2016 and two in the fourth quarter of 2016.

The company has reached an agreement with an unaffiliated third party 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 purchase price of the four vessels, in aggregate, is approximately $154 million. One vessel is expected to be delivered in the third quarter of 2014 and the remaining three are expected to be delivered in the first quarter of 2015. These vessels are similar to the company’s newbuildings that are also under construction at the same shipyard.

Approximately 20% of the total purchase price 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 affiliates of York Capital and the remainder of the purchase price will be paid to the shipyard from cash-on-hand and bank debt.

Scorpio Bulkers Inc., meantime, reported that it has entered into agreements for the purchase of six Kamsarmax dry bulk vessels and two Ultramax dry bulk vessels, as listed below:

Yard           DWT           Delivery
Shanghai Waigaoqiao Shipbuilding           82,000           Q2-14
Shanghai Waigaoqiao Shipbuilding           82,000           Q3-14
Jiangsu Yangzijiang Shipbuilding              82,000           Q3-15
Jiangsu Yangzijiang Shipbuilding              82,000           Q3-15
Jiangsu Yangzijiang Shipbuilding              82,000           Q4-15
Jiangsu Yangzijiang Shipbuilding              82,000           Q1-16
Mitsui Engineering & Shipbuilding            60,200           Q3-16
Mitsui Engineering & Shipbuilding            60,200           Q3-16

The total purchase price for the vessels is approximately $242 million.