Scorpio Tankers Inc. Announces Agreements to Sell Two MR Product Tankers

Rhea-AI Summary

Scorpio Tankers Inc. announced the sale of two 2013 built MR product tankers for $36.15 million each, with no debt repayments. The vessels are unencumbered, and the sales are set to close in the first half of 2024.

Insights

Financial Analyst

The sale of the MR product tankers by Scorpio Tankers represents a strategic asset liquidation, which could signal a shift in capital allocation or a move to optimize the company's fleet in response to market conditions. With the vessels being unencumbered, the entirety of the $72.3 million from the sales flows directly into corporate coffers, potentially bolstering the balance sheet. This influx of capital might be allocated towards debt reduction, fleet modernization, or returned to shareholders through dividends or buybacks, each scenario having different implications for shareholder value.

Investors should consider the implications of these sales on the company's operational capacity. The removal of two tankers may affect revenue streams, although this could be offset if the market for tanker charters is currently depressed or if the vessels were operating at a disadvantage compared to newer or more efficient ships. Furthermore, the age of the vessels, at 11 years, suggests a possible strategy of selling assets as they reach a certain point in their depreciation curve, which could be a prudent move to avoid escalating maintenance costs and potential declines in resale value.

Market Research Analyst

Examining the broader market implications, the sale price of $36.15 million per vessel could provide insights into the current demand and valuation for MR product tankers. This price point may reflect industry trends and the health of the secondary market for such assets. Stakeholders should compare this transaction to recent sales of similar vessels to gauge whether Scorpio Tankers secured a favorable deal.

Additionally, the decision not to repay debt with the proceeds suggests confidence in the company's liquidity and financial strategy. However, it's important to monitor how the market reacts to these sales, as it could influence the stock's performance depending on whether investors interpret the move as a positive restructuring effort or a sign of distress. The timing of the closure of these sales, slated for the first half of 2024, will also be key in understanding the immediate financial impact on the company's quarterly results.

MONACO, March 20, 2024 (GLOBE NEWSWIRE) -- Scorpio Tankers Inc. (NYSE:STNG) (“Scorpio Tankers,” or the “Company”) announced today that it has entered into agreements to sell two 2013 built MR product tankers, STI Larvotto and STI Le Rocher, for $36.15 million per vessel. The Company will make no debt repayments associated with these sales as these vessels are unencumbered. The sales are expected to close within the first half of 2024.

About Scorpio Tankers Inc.

Scorpio Tankers Inc. is a provider of marine transportation of petroleum products worldwide. Scorpio Tankers Inc. currently owns or lease finances 111 product tankers (39 LR2 tankers, 58 MR tankers and 14 Handymax tankers) with an average age of 8.1 years. The Company has entered into agreements to sell three of its MR tankers within the first half of 2024. Additional information about the Company is available at the Company’s website www.scorpiotankers.com, which is not a part of this press release.

Forward-Looking Statements

Matters discussed in this press release may constitute forward‐looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward‐looking statements in order to encourage companies to provide prospective information about their business. Forward‐looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “target,” “project,” “likely,” “may,” “will,” “would,” “could” and similar expressions identify forward‐looking statements.

The forward‐looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in the Company’s records and other data available from third parties. Although management believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond the Company’s control, there can be no assurance that the Company will achieve or accomplish these expectations, beliefs or projections. The Company undertakes no obligation, and specifically declines any obligation, except as required by law, to publicly update or revise any forward‐looking statements, whether as a result of new information, future events or otherwise.

In addition to these important factors, other important factors that, in the Company’s view, could cause actual results to differ materially from those discussed in the forward‐looking statements include unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies in response to epidemic and other public health concerns including any effect on demand for petroleum products and the transportation thereof, expansion and growth of the Company’s operations, risks relating to the integration of assets or operations of entities that it has or may in the future acquire and the possibility that the anticipated synergies and other benefits of such acquisitions may not be realized within expected timeframes or at all, the failure of counterparties to fully perform their contracts with the Company, the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for tanker vessel capacity, changes in the Company’s operating expenses, including bunker prices, drydocking and insurance costs, the market for the Company’s vessels, availability of financing and refinancing, charter counterparty performance, ability to obtain financing and comply with covenants in such financing arrangements, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, including the impact of the conflict in Ukraine and the developments in the Middle East, including the armed conflict in Israel and Gaza, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off‐hires, and other factors. Please see the Company’s filings with the SEC for a more complete discussion of certain of these and other risks and uncertainties.

Contact Information

Scorpio Tankers Inc.

James Doyle – Head of Corporate Development & Investor Relations

Tel: +1 646-432-1678

Email: investor.relations@scorpiotankers.com

FAQ

What did Scorpio Tankers announce regarding two product tankers?

Scorpio Tankers announced the sale of two 2013 built MR product tankers, STI Larvotto and STI Le Rocher.

How much is each vessel being sold for?

Each vessel is being sold for $36.15 million.

Are there any debt repayments associated with the sales?

There are no debt repayments associated with these sales as the vessels are unencumbered.

When are the sales expected to close?

The sales are expected to close within the first half of 2024.