Scorpio Tankers Sells Four LR2 Tankers, Plans $367.8M Debt Prepayment
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3 days ago
0mins
Scorpio Tankers has entered into agreements to sell four LR2 product tankers, a letter of intent to purchase two newbuilding MR product tankers and its intention to repay all outstanding secured debt due 2028. The company has entered into agreements to sell four LR2 product tankers consisting of two 2014 built LR2 product tankers, STI Broadway and STI Condotti, and two 2015 built LR2 product tankers, STI Winnie and STI Lauren, for $285.8Min aggregate. The sales of these vessels are expected to close within Q2 or Q3. The company has entered into a letter of intent to purchase two scrubber-fitted MR newbuilding product tankers for $46.25M per vessel. The vessels are expected to be constructed in China and deliveries are expected in 1Q30. Aside from a 10% initial deposit, the remaining payments are not due until 2028 or later. The company intends to make unscheduled prepayments totaling $367.8M in aggregate on certain of its secured credit facilities. This amount represents the aggregate debt outstanding under credit facilities scheduled to mature in 2028. Further, the company intends to permanently cancel two undrawn revolver capacities. These debt prepayments and undrawn revolver cancellations are expected to occur in Q2, which would result in the termination of these credit facilities.
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Analyst Views on STNG
Wall Street analysts forecast STNG stock price to fall
4 Analyst Rating
3 Buy
0 Hold
1 Sell
Moderate Buy
Current: 74.600
Low
53.00
Averages
72.00
High
80.00
Current: 74.600
Low
53.00
Averages
72.00
High
80.00
About STNG
Scorpio Tankers Inc is a Monaco-based provider in the transportation of refined petroleum products. The Company involves in the oil, seaborne transportation of refined petroleum products from the tanker industry to the international shipping markets. It operates through four segments: Handymax, MR (Medium Range), Long Range 1 (LR1)/Panamax and Long Range 2 (LR2)/Aframax. It consists of 113 wholly owned, finance leased or bareboat chartered-in tankers (39 LR2, 60 MR and 14 Handymax). The segments represent a different type of vessel being around 110 with which it operates with the smaller and bigger type of ships that include Handymax, MR, LR1 and LR2 under its own ownership as well as finance, leased or chartered in.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Market Trends: As the AI and semiconductor sectors rapidly evolve, the inclusion of these stocks may attract more investor attention, further boosting market enthusiasm in these areas.
See More
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- Strong Cash Flow: CEO Emanuele Lauro emphasized the company's ability to generate substantial free cash flow even under market stress, attributed to effective asset management and financing strategies, enhancing financial stability.
- Operational Efficiency Improvement: Adjusted EPS reached $3.02, exceeding the expected $2.62, with an operating margin of 72.4%, significantly up from 29.6% in the same quarter last year, reflecting success in cost control and efficiency enhancements.
- Optimistic Market Outlook: As global product inventories rebuild and demand normalizes, Scorpio Tankers will closely monitor market dynamics in the coming quarters, particularly focusing on vessel sales and buyback execution to ensure sustained profitability and competitive positioning.
See More
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- Demand Surge: The geopolitical tensions from the Iran conflict have significantly increased tanker transportation demand, driving improvements in the company's performance and stock price.
- Market Dynamics: The closure of the Strait of Hormuz has intensified global tanker transportation pressures, enhancing Scorpio Tankers' competitive position in the market and likely attracting more investor attention.
- Strategic Implications: With soaring freight rates, Scorpio Tankers is not only poised to enhance profitability but may also capture a larger market share amid future market fluctuations, solidifying its industry leadership.
See More
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- Market Reaction: This financing initiative may attract investors interested in fixed-income opportunities, particularly in the current interest rate environment, providing a relatively low-risk investment option and enhancing the company's appeal in capital markets.
- Strategic Implications: By issuing these bonds, Scorpio Tankers not only optimizes its capital structure but also secures funding for future vessel acquisitions and operational expenses, further solidifying its competitive position in the shipping industry.
See More
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- Interest Rate and Accrued Interest: The new notes are priced at 110.25% of par, with approximately $1.56 in accrued interest per $1,000 principal from April 10 to May 11, 2026, enhancing investor yield expectations and making the offering more attractive.
- Stock Buyback Initiative: Concurrently, the company will repurchase 649,427 shares at $84.69 each, a move that not only aims to boost earnings per share but also reflects management's confidence in the stock's value.
- Future Growth Outlook: Scorpio Tankers anticipates approximately 3% fleet growth over the next three years and has authorized a $500 million buyback, demonstrating a proactive expansion strategy in the oil transportation market.
See More
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- Yield and Interest Rate: The newly issued notes carry an annual interest rate of 1.75%, with an expected yield to maturity of approximately 1.0%, which will help lower the company's financing costs while offering investors stable returns, enhancing their attractiveness.
- Stock Buyback Plan: The company plans to use $55 million of the net proceeds to repurchase 649,427 shares of common stock at a price of $84.69 per share, a move that not only supports earnings per share but may also provide price support for the stock.
- Future Outlook: The offering is expected to close on May 12, 2026, and if the initial purchaser exercises its option to purchase additional notes, net proceeds could reach $248.8 million, further strengthening the company's capital structure and supporting its long-term growth strategy.
See More
