Scorpio Tankers Inc. (NYSE: STNG) has announced that four MR product tankers under construction in South Korea will be added to their fleet in exchange for cash, and a transfer of common shares to to Ceres, Valero and a group of institutional investors advised by J.P. Morgan Asset Management.
The ships are expected to be delivered in the first and second quarters of 2014 and are similar to the ships that Scorpio has under construction at that same yard.
Scorpio notes the purchase price of the four vessels, in aggregate, is approximately $151 million, 30% of which will consist of newly issued Scorpio common shares, and the remainder 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 Scorpio 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.
Scorpio Tankers has 64 vessels currently under construction (29 MR, 12 LR2, and 14 Handymax ice class-1A product tankers, and 9 VLGC), one of which is expected to be delivered by October 2013, 44 within 2014 and the remaining 19 by the end of 2015.