Scorpio Tankers Inc. (NYSE: STNG) ("Scorpio Tankers," or the "Company") announced today that it has agreed to acquire subsidiaries of Trafigura Maritime Logistics Pte. Ltd. (“Trafigura”), which have leasehold interests in 19 product tankers (the “Vessels”), for an aggregate value of $803 million.
The acquisition of the leasehold interest in the Vessels includes a finance lease arrangement (see description below) 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.
Emanuele A. Lauro, Chief Executive Officer of Scorpio Tankers commented:
“This transaction represents a close alignment between Scorpio Tankers 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 orderbook. The average age of our fleet will be reducing (from 4.1 to 3.7 years) and our fuel efficiency is expected to increase with the addition of these modern scrubber fitted vessels. 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, their 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.”