Monaco-headquartered Scorpio Tankers has revealed a series of more than 20 vessel repurchases in a move that will see the Emanuele Lauro-led product tanker owner further reduce its financial costs.
The New York-listed company is taking back ships on various sale and leaseback arrangements, including the 2016-built LR2 product tanker STI Supreme, from Ocean Yield, for $27.8m.
A regulatory filing with the US Securities and Exchange Commission showed the company had given notice that it would exercise options to buy an MR STI Maximus and two LR2s STI Lily and STI Lotus, that are currently financed by Bank of Communications Financial Leasing’s (BCFL) $670m deal. The deal should close in the fourth quarter at $85.5m.
Further three LR2s—STI Stability, STI Solace and STI Solidarity — leased by the BCFL will be bought back in the fourth quarter with $58.4m left on the lease, as well as an MR STI Amber for about $8.2m.
Five more LR2 units —STI Gauntlet, STI Gladiator, STI Goal, STI Gratitude and STI Guide —financed on the CSSC lease will be taken over this year for an estimated $110.4m at the date of purchase.
Further, on the Chinese MR side, the company is repurchasing the STI Galata and STI La Boca from Taiping & Sinopec Financial Leasing (TSFL) with an outstanding lease liability of about $38.1m and STI Leblon and STI Bosphorus from CMB Financial Leasing for $36.5m. The company will also take full ownership of four units leased from SPDB Financial Leasing: STI Esles II, STI Donald C Trauscht, STI Jardins and STI San Telmo. The deal for the first duo should close in the fourth quarter at $38.1m, with the remaining two ships expected to be under full ownership in the first quarter of 2024 for $36.9m.
Commenting on the buy back news, American broker Compass Maritime noted in its latest weekly report: “The past 18 months of incredible and record-high tanker charter rates have enabled extensive balance sheet restructuring, lease buy-backs, share buybacks, dividends, and refinancing at unprecedented levels for both public and private tanker companies.”
Scorpio Tankers has taken several debt reduction actions in the form of vessel buybacks since last summer on the back of the fundamentally sound product tanker market. The company, with a fleet of 112 vessels with an average age of 7.7 years, has three sale and leaseback deals with BCFL expiring in September 2024 with a $15.1m purchase option attached.
The company recently sealed a deal with DekaBank Deutsche Girozentrale for up to $94m of which $43.8m has already been drawn down and secured by two ships with the remaining amount to be utilised in the fourth quarter of 2023. Debt relating to six ships has also been repaid in the past two months for a total of $101.3m.
