Narrative
Full Description
Project narrative
In May 2021, under a least financing agreement, Scorpio Tankers Inc. closed on the sale and leaseback of two LR2 vessels (STI Grace and STI Jermyn) with CSSC (Hong Kong) Shipping Company Limited for aggregate proceeds of $57.4 million. Each vessel was subject to a six-year bareboat charter, bearing interest at LIBOR plus a margin of 3.50% per annum, with purchase options beginning on the second anniversary date from the delivery date of the respective vessel and a purchase obligation for each vessel upon the expiration of each agreement. In May 2023, Scorpio Tankers Inc. exercised the purchase options on the vessels under this arrangement, repaid the outstanding indebtedness of $46.9 million, and paid purchase option fees of $0.7 million as part of these transactions, thus terminating the leases.
Staff comments
1. CSSC (Hong Kong) Shipping Company Limited (CSSC HK Shipping) is a subsidiary of China Shipbuilding Group Corporation (CSG), the world's largest shipbuilding conglomerate. CSSC HK Shipping is a shipyard-affiliated leasing company that operates in Asia, Europe, the United States, and the People's Republic of China. 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, CSSC) 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 3.5% to average 6-month LIBOR in May 2021 (0.18622%).