Narrative
Full Description
Project narrative
In March 2021, Scorpio Tankers Inc. received a commitment to sell and leaseback four Handymax vessels (STI Comandante, STI Brixton, STI Pimlico and STI Finchley) and one MR (STI Westminster) from CMB Financial Leasing Co. Ltd (CMBFL). In March 2021, through a lease financing agreement, Scorpio Tankers Inc. closed on the sale and leaseback of the aforementioned Handymax vessels for aggregate proceeds of $58.8 million. In April 2021, Scorpio Tankers Inc. closed on the sale and leaseback of STI Westminster for aggregate proceeds of $20.25 million. Each vessel is subject to a seven-year bareboat charter, bearing interest at the prevailing benchmark rate (LIBOR and SOFR plus a CSA) plus a margin of 3.25% per annum for the Handymax vessels and 3.20% per annum for the MR vessel. Each agreement contains purchase options to re-acquire each of the subject vessels beginning on the third anniversary date from the delivery date of the respective vessel, with a purchase option for each vessel upon the expiration of each agreement. The amounts outstanding under the lease financing agreements were $61.5 million and $68.0 million as of December 31, 2023 and 2022, respectively, and Scorpio Tankers Inc. was in compliance with the financial covenants as of those dates.
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 3.25% to average 6-month LIBOR in March 2021 (0.20127%).