South Korea: Scorpio Tankers, HMD Sign Contract for 52.000 DWT MR Product Tanker

Scorpio Tankers Inc has signed a contract with Hyundai Mipo Dockyard Co., Ltd. of South Korea (HMD) to construct a 52,000 DWT MR product tanker for approximately $36.4 million. The company executed a $92.0 million credit facility (“2011 Newbuilding Credit Facility”) with Credit Agricole Corporate and Investment Bank (“CA-CIB”) and Skandinaviska Enskilda Banken AB (“SEB”) to partially finance four previously announced newbuilding 52,000 DWT product tankers (MRs) that the Company contracted for in June 2011 with HMD in South Korea.

Scorpio Tankers reached an agreement with its lenders to extend the availability for the 2011 Credit Facility with Nordea Bank Finland plc, DnB NOR Bank ASA, and ABN AMRO Bank N.V., to finance one of the newbuilding 52,000 DWT product tankers (MR) that the Company contracted for in June 2011 and the sixth newbuilding.

Emanuele Lauro, CEO of Scorpio Tankers, commented, “Modernizing our fleet while securing financing for all of our newbuildings; expanding our relationship with our lenders; and taking advantage of what we believe are very attractive time charter opportunities all reflect that the Company will be positioned appropriately going forward. Our view of improving market fundamentals remains intact, highlighted by the recent strengthening in spot rates, and the steps we are taking to solidify our position for the future.

Newbuilding Vessel Agreement

The sixth newbuilding vessel that the Company has agreed to acquire is scheduled to be delivered to the Company in January 2013. The agreement contains options for the Company to order up to three additional 52,000 DWT MR product tankers of the same specifications. The first option is for the construction of a single additional vessel at the same price as the sixth newbuilding, and the Company must notify the shipyard by the middle of January 2012 if it intends to exercise this option. In the event the Company exercises the first option, the Company shall have a second option for the construction of a further two vessels for a price of $37.2 million each, and the Company must notify the shipyard by the middle of March 2012 if it intends to exercise this option.

2011 Newbuilding Credit Facility

The 2011 Newbuilding Credit Facility with CA-CIB and SEB is for the partial financing of the pre-delivery and delivery installments for the four newbuildings that the Company contracted for in June 2011 and which are scheduled for delivery between July and October 2012. The facility is for an aggregate of $92.0 million to be made available in four tranches, one for each vessel, in the amount of $23.0 million, which is approximately 61% of contracted price for each vessel. Drawdowns will be available after the first 39% of the contracted price for each vessel is paid by the Company and subject to certain other conditions precedent. The four vessels will be collateral for the credit facility. The tranche relating to each vessel will be repaid after delivery of that vessel in quarterly installments of $375,000, which equates to a repayment profile of 15.33 years, and each tranche is scheduled to mature approximately seven years after delivery of the relevant vessel from the shipyard. Borrowings under the credit facility bear interest at LIBOR plus an applicable margin of 2.70% per annum. A commitment fee equal to 1.10% per annum is payable on the unused daily portion of the credit facility. The covenants and other conditions are similar to those contained in the Company’s existing credit facilities.

Shipbuilding Tribune Staff, December 23, 2011; Image: hmd

Posted on December 23, 2011