Scorpio Bulkers has announced its formal exit from the dry bulk shipping sector to focus on next-generation offshore wind turbine installation vessels, revealing plans to sell its remaining fleet and take a $500 million write-down in the process.
Monaco-based Scorpio Bulkers IPO’d on the New York Stock Exchange in 2013 but has seen its share price crater over the last several years along with the broader dry bulk market.
Scorpio Bulkers announced its intention to transition to offshore renewables this summer and said it planned to invest up to $290 million on a newbuild Wind Turbine Installation Vessel (WTIV) at Daewoo Shipbuilding and Marine Engineering. Since then, the company has sold off eight dry bulk vessels and has contracted to sell another sixteen more vessels in the first half of 2021.
Scorpio Bulkers now says it’s exiting the dry bulk sector completely in 2021, classifying its entire remaining 25-vessel fleet as up for sale, and it even plans to change the company name.
“As a result of this decision, the Company expects to record a write-down ranging from $475.0 million to $500.0 million on vessels sold and classified as held for sale,” Scorpio Bulkers said in a statement. “This estimated write-down includes non-cash charges of $425.0 million to $440.0 million to reflect the current fair market value of the fleet and $50.0 million to $60.0 million of estimated cash charges, which include $34.0 million to $36.0 million for the termination of various vessel-related agreements, as well as other selling costs. The Company will also write-off approximately $10.0 million of deferred financing costs as outstanding debt is repaid.”
Scorpio Bulkers has also submitted a notice of termination with its vessel managers, effectively ending its relationship with Scorpio Commercial Management s.a.m. and Scorpio Ship Management s.a.m.
“We believe that the investment in renewables is a more attractive opportunity in the marine space going forward as opposed to dry cargo,” Emanuele Lauro, chairman and CEO, told Reuters earlier this year.
The wind turbine installation vessel is expected to be delivered in the third quarter of 2023 with options for three more vessels.
“For a public company involved in the dry cargo space, the choice was to stay put and do nothing or go with a change,” Lauro said. “Scorpio Bulkers … is looking at pivoting away from being a coal or dry cargo commodities dependent company into one that will have an increasing percentage of its revenues generated by the renewable energy space.”
The proposed new company name is expected to be announced on or before January 8, 2021.
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