NYSE-listed Scorpio Tankers is selling equity to purchase even more vessels on top of its already prodigious expansion programme.
The Emanuele Lauro-led product tanker specialist is selling 15 million shares priced at USD9.30/share, a 7% discount from the closing price on 29 April, just prior to the announcement of the offering.
Gross proceeds will be USD139.5 million or USD160.4 million if the underwriters fully exercise their option to purchase an additional 2.25 million shares.
According to the company, “Substantially all of the net proceeds of the offering are expected to be used to fund a portion of the acquisition costs of additional modern product tankers, which may include three LR2 product tankers that the company currently has options to purchase from an unaffiliated third party.”
The company has been rapidly taking delivery of newbuilds over the past year and now has a fleet of 67 owned product tankers. Five MRs and six LRs remain to be delivered, seven through June and the remaining four next year.
“We anticipate Scorpio to acquire three LR2s with prompt delivery, with additional vessels potentially to be acquired based on the likely purchase price of the LR2s,” said Jefferies analyst Doug Mavrinac in a research note.
The vessel purchases “would steepen our projected EBITDA ramp for the company given the well-timed nature of the acquisitions, with Scorpio’s EBTIDA now expected to increase from just under USD70 million in 2014 to more than USD400 million in 2016″, said Mavrinac.
“Refined products tanker charter rates likely to strengthen further,” he maintained. “We believe refined product tanker demand should only increase from current levels, which should translate to increasing vessel utilisation levels given the limited supply growth expected in the refined products tanker market.”