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December 18, 2014

Scorpio Bulkers modifies new-building contracts for Capesize bulk carriers

Marshall Islands-based marine transportation company Scorpio Bulkers has reached agreements with shipyards in South Korea and Romania to modify six new-building contracts for Capesize bulk carriers into contracts for LR2 product tankers.

Marshall Islands-based marine transportation company Scorpio Bulkers has reached agreements with shipyards in South Korea and Romania to modify six new-building contracts for Capesize bulk carriers into contracts for LR2 product tankers.

The company has also agreed to sell four LR2 new-building contracts to Scorpio Tankers, with a sale price of $51.0m for each.

This agreement includes an option for the purchase of the two remaining LR2 contracts, which will expire on 31 May next year.

"We have taken these actions to strengthen our liquidity position."

The fixed purchase price will be $52.5m, if the option is exercised.

Scorpio Bulkers will face a total loss on disposal of approximately $41m on the four modified new-building contracts, while the potential disposal of the two options will result in the loss of approximately $14m.

Scorpio Bulkers chairman and CEO Emanuele Lauro said: "We have taken these actions to strengthen our liquidity position. We will continue to be proactive in further strengthening our balance sheet."

The company has said that the agreements will be reclassified on the balance sheet as assets held for sale, with the sale of contracts expected to result in an estimated reduction of future cash obligations of $120m.

In March this year, Scorpio Bulkers signed multiple agreements for dry-bulk vessels, which included the purchase of four Capesize dry-bulk vessels for approximately $306m, the construction of one Capesize vessel and a time charter-in for an additional seven.

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