Scorpio Tankers Inc. Announces Fourth Quarter and Year End 2011 Financial Results
Thursday, 23 February 2012 | 14:32
Scorpio Tankers Inc. yesterday reported its results for the three months and year-ended December 31, 2011.
The Company recorded a net loss of $71.7 million or $2.21 basic and diluted loss per share, which included a non-cash impairment charge of $66.6 million, or $2.05 basic and diluted loss per share for the three months ended December 31, 2011. Excluding the impairment charge, the net loss would have been $5.1 million, or $0.16 basic and diluted loss per share. This is compared to a net loss of $2.7 million or $0.13 basic and diluted loss per share for the three months ended December 31, 2010.
The Company recorded a net loss of $82.7 million or $2.88 basic and diluted loss per share, which included a non-cash impairment charge of $66.6 million, or $2.32 basic and diluted loss per share for the year ended December 31, 2011. Excluding the impairment charge, the net loss would have been $16.1 million, or $0.56 basic and diluted loss per share. This is compared to a net loss of $2.8 million or $0.18 basic and diluted loss per share for the year ended December 31, 2010.
Summary of Recent and Fourth Quarter Significant Events:
• Signed a contract with Hyundai Mipo Dockyard Co., Ltd. of South Korea ("HMD") in February 2012 to construct the Company's seventh newbuilding vessel.
• Contracted to sell the STI Conqueror, STI Gladiator and STI Matador in February 2012 for $21.0 million, $16.2 million and $16.2 million, respectively, with the expected closing of the sales by the end of April 2012.
• Agreed to charter-in two MR product tankers the Pacific Duchess (2009 built, 46,697 DWT) and the Targale (2007 built, 49,999 DWT), with expected deliveries in March 2012 and May 2012, respectively.
• Recorded a non-cash impairment charge of $66.6 million in the fourth quarter 2011 due to weak market fundamentals and a decline in values for second hand product tankers.
• Executed a $92.0 million credit facility to partially finance four newbuilding 52,000 DWT product tankers contracted for in June 2011.
• Signed an agreement to extend the availability for the Company's 2011 Credit Facility which will enable it to partially finance the fifth, sixth and seventh newbuilding 52,000 DWT product tankers.
• Reached an agreement with its lenders in December 2011 to amend financial covenants in certain loans which are favorable to the Company.
• Closed the follow-on offering in December 2011 and received $36.5 million in net proceeds.
Emanuele Lauro, chief executive officer and chairman of the board, commented, "Though we experienced improvements in December, overall spot market TCE rates were depressed throughout the fourth quarter. This has capped off a challenging year which has culminated in a $66.6 million write-down of the value of our fleet. We retain a positive long-term outlook in the product tanker sector, and we expect the first quarter 2012 rates to be better than those of the fourth quarter 2011. We continue to take advantage of opportunities to time charter-in vessels at attractive prices which enables us to retain our desired level of exposure to the spot market and operating leverage."
Recent Significant Events
Newbuilding Vessel Agreement
The Company signed a contract with HMD to construct a newbuilding vessel for $36.0 million, which is the Company's seventh 52,000 DWT MR product tanker newbuilding with HMD. The seventh newbuilding is scheduled to be delivered to the Company in April 2013.
The Company has entered into agreements to sell three of its Handymax vessels: the STI Conqueror for $21.0 million, the STI Gladiator for $16.2 million, and the STI Matador for $16.2 million. The sales of the three vessels are expected to close in April 2012. In connection with these sales, the availability of the Company's 2010 Credit Facility will decrease by approximately $31.0 million.
As part of the sale of all three vessels, the Company will record a $4.0 million loss on disposal in the first quarter of 2012. Additionally, approximately $0.5 million of deferred financing fees attributable to the 2010 Credit Facility will be written off upon closing of the sale.
Time charter-in agreements
In February 2012, the Company agreed to charter-in a 2009 built MR product tanker (46,697 DWT), the Pacific Duchess. The vessel will be chartered-in for one year at $13,800 per day and is expected to be delivered in early March 2012. The agreement includes an option to extend the charter for an additional year at $14,800 per day.
In February 2012, the Company agreed to charter-in a 2007 built MR product tanker (49,999 DWT), the Targale. The vessel will be chartered in for two years at $14,500 per day and is expected to be delivered in May 2012. The agreement includes three consecutive options to extend the charter for up to three consecutive one year periods at $14,850 per day, $15,200 per day and $16,200 per day, respectively.
Vessel impairment loss
The Company recognized an impairment loss of $66.6 million for the period ended December 31, 2011, which represented the difference between the carrying value and the recoverable amount of each of the vessels, the latter calculated as the higher of fair value less costs to sell and value in use. No impairments were recognized in the year ended December 31, 2010.
Source: Scorpio Tankers