BCFL enters into sale and leaseback transactions with Scorpio Tankers Inc. worth $137.5 million for 4 MR product tankers (STI Donald C Trauscht, STI Esles II, STI San Telmo, and STI Jardins)

Project narrative

In September 2017, Scorpio Tankers Inc. entered into agreements to sell and lease back five 2012 built MR product tankers (STI Amber, STI Topaz, STI Ruby, STI Garnet and STI Onyx) with Bank of Communications Finance Leasing Co Ltd. (BCFL) for a sales price of $27.5 million per vessel. The financing for STI Topaz, STI Ruby and STI Garnet closed in September 2017, the financing for STI Onyx closed in October 2017, and the financing for STI Amber closed in November 2017. Each agreement was for a fixed term of seven years at a bareboat rate of $9,025 per vessel per day, with three consecutive one-year options to extend each charter beyond the initial term. Furthermore, Scorpio Tankers Inc. had the option to purchase these vessels beginning at the end of the fifth year of the agreements through the end of the tenth year of the agreements. A deposit of $5.1 million per vessel was retained by the buyers and was to either be applied to the purchase price of the vessel if a purchase option is exercised or refunded to Scorpio Tankers Inc. at the expiration of the agreement (as applicable). In April 2020, Scorpio Tankers Inc. executed an agreement to increase the borrowing capacity by up to $1.9 million per vessel to partially finance the purchase and installation of scrubbers on the above vessels. The agreement was for a fixed term of three years at the rate of up to $1,910 per vessel per day to be allocated to principal and interest. In July 2020, Scorpio Tankers Inc. drew $1.9 million to partially finance the purchase and installation of a scrubber on one vessel and in January 2021, Scorpio Tankers Inc. drew $5.8 million to partially finance the purchase and installation of scrubbers on three vessels. Scorpio Tankers Inc.’s lease financing agreements with BCFL included a financial covenant that required it to maintain that the aggregate of the fair market value of each vessel leased under the facility plus the aforementioned $5.1 million deposit shall at all times be no less than 100% of the then outstanding balance plus the aforementioned $5.1 million deposit. In November 2023, Scorpio Tankers Inc. exercised the purchase option on STI Amber prior to its sale and repaid the outstanding indebtedness of $8.2 million, which was net of the vessel deposit, as part of this transaction, thus terminating the lease. In November 2023, Scorpio Tankers Inc. gave notice to exercise the purchase options on the remaining four vessels. In December 2023, Scorpio Tankers Inc. closed on the purchase of STI Ruby and repaid the outstanding indebtedness of $7.4 million, which was net of the vessel deposit, as part of this transaction, thus terminating the lease. The purchases of STI Topaz, STI Garnet and STI Onyx closed in January 2024. The carrying value of the lease obligations related to these vessels were classified as current on the consolidated balance sheet as of December 31, 2023. The aggregate outstanding balances under this arrangement were $21.7 million and $53.2 million as of December 31, 2023 and 2022, respectively. Scorpio Tankers Inc. was in compliance with the financial covenants as of those dates.