Narrative
Full Description
Project narrative
In March 2021, under a least financing agreement, Scorpio Tankers Inc. closed on the sale and leaseback of three MR vessels (STI Black Hawk, STI Notting Hill and STI Pontiac) with Taiping & Sinopec Financial Leasing Co., Ltd. for aggregate proceeds of $57.7 million, Each vessel was subject to a seven-year bareboat charter, bearing interest at the prevailing benchmark rate (LIBOR and SOFR plus a CSA) plus a margin of 3.20% per annum. Each agreement contains purchase options to re-acquire each of the subject vessels beginning on the second anniversary date from the delivery date of the respective vessel, with a purchase option for each vessel upon the expiration of each agreement. The carrying value of the lease obligations related to these vessels was therefore classified as current on the consolidated balance sheet of Scorpio Tankers Inc. as of December 31, 2023. The carrying values of the amounts due under the arrangement (including accrued purchase option fees of $0.9 million) were $46.5 million and $50.0 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. Taiping & Sinopec Financial Leasing Co., Ltd. is a joint venture between Taiping Insurance Group and China Petrochemical Corporation. Taiping Insurance Group is a state-owned insurance company headquartered in Hong Kong. 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, Taiping & Sinopec 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 March 2021 (0.20127%)