Scorpio Tankers Inc. yesterday reported its results for the three months ended March 31, 2012. The Company recorded a net loss of $5.1 million or $0.14 basic and diluted loss per share, which included a non-cash charge of $4.5 million, or $0.12 basic and diluted loss per share relating to the loss on sales of the STI Conqueror, STI Matador, and STI Gladiator for the three months ended March 31, 2012. Excluding the non-cash charge, the net loss would have been $0.6 million, or $0.02 basic and diluted loss per share. This is compared to a net loss of $1.4 million or $0.06 basic and diluted loss per share for the three months ended March 31, 2011.
Summary of Recent and First Quarter Significant Events:
• Closed on a Registered Direct Placement of 4,000,000 shares of common stock at an offering price of $6.75 per share, receiving net proceeds of $25.8 million.
• Closed on the sales of the STI Conqueror, STI Matador, and STI Gladiator.
• Signed contracts with Hyundai Mipo Dockyard Co., Ltd. of South Korea ("HMD") in February and March 2012 to construct the Company's seventh and eighth newbuilding vessels.
• Took delivery of the MR product tanker, Pacific Duchess (2009 built, 46,697 DWT) in March 2012 on a one year time charter-in agreement.
• Agreed to charter-in four other MR product tankers, the Targale (2007 built, 49,999 DWT), Pacific Marchioness (2010 built, 46,697 DWT), STX Ace6 (2007 built, 46,161 DWT) and Freja Lupus (2012 build, 50,385 DWT), all of which are expected to be delivered by the end of May 2012.
Emanuele Lauro, chief executive officer and chairman of the board commented, "We are pleased by our quarterly results, especially in light of several transitory but negative factors. First, the unseasonably warm weather in the Northern Hemisphere dampened demand for heating oil and other products that we carry on our vessels. Second, our operating expenses were higher than planned which we attribute to the positioning of our fleet. Third, since several major refinery closures were announced, we have witnessed significant changes in market activity as industry participants prepare for new trading patterns and increased freight rate volatility that will come as a result."
Mr. Lauro continued, "We remain focused on growing our modern fleet and our operating leverage to capture improving fundamentals. The sale of three of our older vessels, along with our successful registered direct placement of four million shares of common stock, has enabled us to free up necessary capital to pursue our strategy of acquiring modern, high quality vessels while maintaining sensible operating leverage."
Recent Significant Events
Follow-on offering
On April 18, 2012, the Company closed on the sale of 4,000,000 shares of its common stock in a registered direct placement of common shares at an offering price of $6.75 per share. The Company received net proceeds of approximately $25.8 million, after deducting the placement agents' discount and offering expenses.
Vessel sales
The Company closed on the sales of three of its Handymax vessels: the STI Conqueror for $21.2 million in March 2012, the STI Matador for $16.2 million in April 2012, and the STI Gladiator for $16.2 million in May 2012. As a result of the disposals, the Company recorded a $4.5 million loss in the first quarter of 2012. In connection with these sales, the availability of the Company's 2010 Revolving Credit Facility decreased by approximately $31.0 million.
First Quarter Significant Events
Newbuilding Vessel Agreements
The Company signed contracts with HMD to construct two newbuilding vessels for $36.0 million each, which are the Company's seventh and eighth 52,000 DWT MR product tanker newbuildings with HMD. These vessels are scheduled to be delivered to the Company in April and May 2013, respectively.
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 was delivered in March 2012. The agreement includes an option for the Company 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 for the Company 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.
In March 2012, we agreed to charter-in a 2010 built MR product tanker, the Pacific Marchioness. The vessel will be chartered-in for one year at $13,900 per day and is expected to be delivered in May 2012. The agreement includes an option for the Company to extend the charter for an additional year at $14,900 per day.
In March 2012, we agreed to charter-in a 2007 built MR product tanker, the STX Ace6. The vessel will be chartered-in for two years at $14,150 per day and is expected to be delivered in May 2012. The agreement includes an option for the Company to extend the charter for an additional year at $15,150 per day.
In March 2012, we agreed to charter-in a 2012 built MR product tanker, the Freja Lupus. The vessel will be chartered-in for two years at $14,760 per day and is expected to be delivered in May 2012. The agreement includes an option for the Company to extend the charter for an additional year at $16,000 per day.
Source: Scorpio Tankers Inc.