Scorpio Tankers bolsters liquidity, defers scrubber projects on 19 tankers

Monaco-based tanker owner and operator Scorpio Tankers has secured additional liquidity having received new loan commitments for debt repayment.

The company said it had received a commitment for a new credit facility for up to $225 million. The loan, still to be finalized, is expected to consist of a $150 million term loan facility and a $75 million revolving credit facility. 

The loan proceeds have been assigned for refinancing the existing debt on nine vessels, including four vessels that are currently financed under the existing ABN AMRO loan set to mature in the third quarter of 2020.

The loan is expected to close before June 30, 2020, Scorpio Tankers said.

 What is more, the company recently executed an agreement to upsize its $179.2 million credit facility with ING Bank N.V. to $251.4 million. 

The proceeds of the upsized facility are earmarked for refinancing the existing debt on five vessels, which are currently financed under the KEXIM Credit Facility. 

With the two commitments, Scorpio expects to raise approximately $109 million of additional liquidity, after debt repayment. The drawdowns are expected to occur at varying points in the future as several of these financings are tied to scrubber installations on the company’s vessels.

The tanker owner has joined numerous companies in delaying scrubber installations. Scorpio said that it has reached an agreement with its counterparty to postpone the purchase and installation of scrubbers on 19 of its vessels to 2021. 

Scorpio posted a net income of $46.6 million for the three months ended March 31, 2020, much higher than $14.4 million posted in Q1, 2019 amid higher rates and a higher number of operating vessels in the company’s fleet primarily resulting from the Trafigura transaction.

Since the beginning of the year, the company took delivery of three scrubber-fitted MR product tankers (STI Miracle and STI Maestro and STI Mighty) each under eight-year bareboat leases. 

The leasehold interests in these vessels were acquired as part of the deal with Trafigura Maritime Logistics.

Commenting on the impact of the COVID-19 on the tanker market, Scorpio said that the virus and the uncertainty in the supply of oil will continue to cause volatility in the commodity markets. 

“The scale and duration of the impact of these factors remain unknowable but could have a material impact on our earnings, cash flow and financial condition for 2020. An estimate of the impact on the company’s results of operations and financial condition cannot be made at this time,” Scorpio Tankers said.

Scorpio Tankers currently owns, finance leases or bareboat charters-in 137 product tankers with an average age of 4.6 years. In addition, the company will bareboat charter-in one MR tanker that is currently under construction and is scheduled to be delivered in September 2020.