Narrative
Full Description
Project narrative
In September 2020, Scorpio Tankers Inc. executed an agreement with CMB Financial Leasing Co., Ltd to sell and leaseback two MR product tankers (STI Leblon and STI Bosphorus). The aggregate borrowing amount under the arrangement was $45.4 million, which was drawn in September 2020. Each vessel was subject to a seven-year bareboat charter, bearing interest at LIBOR plus a margin of 3.20% per annum, with options to purchase the vessels beginning on the third anniversary of the delivery date of each agreement. Each agreement also had a purchase option at the end of the seventh year, which was equal to the outstanding principal balance at that date. In September 2023, Scorpio Tankers Inc. exercised the purchase options on the vessels under this arrangement, repaid the outstanding indebtedness of $36.5 million, and paid purchase option fees of $0.4 million as part of these transactions, thus terminating the leases.
Staff comments
1. CMB Financial Leasing Co., Ltd. (CMBFL) is a financial services company that provides leasing and financing services, as well as other businesses. CMBFL was founded in April 2008 as a subsidiary of China Merchants Bank and is headquartered in Shanghai. 2. Sale and leaseback (or sale-leaseback) agreements are generally considered to be off-balance-sheet hybrid debt products. 3. A bareboat charter is when the owner of the vessel (in this case, CMB Financial Leasing Co., Ltd) leases (or "charters") the vessel to a lessee ("charterer") without any crew or supplies. The charterer assumes full responsibility for the operation of the vessel. 4. Scorpio Tankers Inc. is a company incorporated under the laws of the Republic of the Marshall Islands on July 1, 2019. Its principal executive offices are located at 99 Boulevard du Jardin Exotique Monaco 98000 and its telephone number at that address is +377-9798-5716. It provides seaborne transportation of crude oil and refined petroleum products worldwide. It began its operations in October 2009 with three vessels. In April 2010, it completed its initial public offering, and its common stock commenced trading on the New York Stock Exchange, or NYSE, under the symbol “STNG.” Scorpio Tankers Inc. has since expanded, and as of March 21, 2024, its fleet consisted of 110 wholly owned or leased financed tankers (39 LR2, 57 MR and 14 Handymax) with a weighted average age of approximately 8.1 years. 5. AidData has estimated the all-in interest rate by adding 3.2% to average 6-month LIBOR in September 2020 (0.27926%).