EX-99.1 2 exh99_1.htm EXHIBIT 99.1 exh99_1.htm
 


Exhibit 99.1
 

Scorpio Tankers Inc. Announces Financial Results for the Third Quarter of 2013, Makes Further Progress on Financing, and Increases Its Quarterly Dividend
 
Monaco—(Marketwired – October 28, 2013) - Scorpio Tankers Inc. (NYSE: STNG) (“Scorpio Tankers,” or the “Company”) today reported its results for the three and nine months ended September 30, 2013.
 
Results for the three months ended September 30, 2013 and 2012
 
For the three months ended September 30, 2013, the Company had an adjusted net income of $0.6 million (see Non-GAAP Measure section below), or $0.00 basic and diluted earnings per share, excluding a $0.1 million, or $0.00 per share unrealized gain on derivative financial instruments. Including the unrealized gain on derivative financial instruments, the Company had net income of $0.7 million, or $0.00 basic and diluted earnings per share.
 
For the three months ended September 30, 2012, the Company had an adjusted net loss of $3.7 million (see Non-GAAP Measure section below), or $0.09 basic and diluted loss per share, excluding a $5.9 million, or $0.14 per share, loss from sales of vessels and a $3.0 million, or $0.07 per share, write-off of deferred financing fees.  Including the aforementioned adjustments, the Company had a net loss of $12.5 million, or $0.30 basic and diluted loss per share for the three months ended September 30, 2012.
 
Results for the nine months ended September 30, 2013 and 2012
 
For the nine months ended September 30, 2013, the Company had an adjusted net income of $10.8 million (see Non-GAAP Measure section below), or $0.08 basic and diluted earnings per share, excluding a $0.5 million, or $0.00 per share unrealized gain on derivative financial instruments. Including the unrealized gain on derivative financial instruments, the Company had net income of $11.2 million or $0.08 basic and diluted earnings per share.
 
For the nine months ended September 30, 2012, the Company had an adjusted net loss of $8.3 million (see Non-GAAP Measure section below), or $0.21 basic and diluted loss per share, excluding a $10.4 million, or $0.26 per share, loss from sales of vessels and a $3.0 million, or $0.07 per share, write-off of deferred financing fees.  Including the aforementioned adjustments, the Company recorded a net loss of $21.7 million, or $0.54 basic and diluted loss per share for the nine months ended September 30, 2012.
 
Declaration of Dividend
 
On October 28, 2013, the Scorpio Tankers’ board of directors declared a quarterly cash dividend of $0.07 per share, payable on December 18, 2013 to all shareholders as of December 3, 2013 (the record date). There are currently 191,656,422 shares outstanding.
 
Emanuele Lauro, chief executive officer and chairman of the board commented, "The past few months have been very exciting for us with the delivery of vessels and additional construction contracts for our Newbuilding Program, as well as a successful equity raising. I am pleased that we have made progress on financing our growth, having secured substantial commitments from KEXIM and KSURE."
 
Summary of Recent and Third Quarter Significant Events:
 
·  
Received loan commitments from a group of financial institutions led by DNB Bank ASA and Skandinaviska Enskilda Banken AB (publ) and from the Export-Import Bank of Korea (“KEXIM”) for a total loan facility of up to $429.6 million (the “KEXIM Financing”). The KEXIM Financing incorporates an optional guarantee from KEXIM for the issuance by the Company, at the option of the Company, of a five year $125.3 million amortizing bond facility; the proceeds of which will reduce KEXIM’s direct loan commitment in the KEXIM Financing.  
 
·  
Received an Acceptance of Insurance Agreement from Korea Trade Insurance Corporation (“KSURE”) covering 95% of an up to $358.3 million KSURE tranche as part of a credit facility of up to $458.3 million (the “KSURE Financing”) that is currently being finalized with a group of financial institutions.
 
 
 
 

 
 
 
·  
Exercised options with Hyundai Samho Heavy Industries ("HSHI") for the construction of two Very Large Gas Carriers (“VLGC”) for approximately $75.0 million each, with deliveries scheduled in the first quarter of 2016.
 
·  
Reached agreements with certain unaffiliated third parties to issue shares in exchange for the transfer of ownership of four MR product tankers currently under construction in South Korea.  The aggregate purchase price of the four vessels is $151.0 million with approximately 30% of the consideration consisting of the newly issued common shares.  Deliveries of vessels are scheduled in the first and second quarters of 2014.
 
·  
Reached agreements with HSHI and Daewoo Shipbuilding and Marine Engineering Co., Ltd. ("DSME") for the construction of a total of nine VLGC for approximately $75.6 million each with deliveries scheduled in the second, third and fourth quarters of 2015. 
 
·  
Reached an agreement with Hyundai Mipo Dockyard (“HMD”) to construct four product tankers consisting of two 52,000 dwt MR product tankers for approximately $35.0 million each (deliveries in the second quarter of 2015) and two Handymax ice class-1A (38,000 dwt) product tankers for approximately $32.0 million each (deliveries in the fourth quarter of 2014).
 
·  
Closed on an underwritten offering of 23 million common shares in August 2013 which includes the full exercise of the underwriters’ overallotment of 3 million shares, raising aggregate net proceeds of $209.8 million.
 
·  
Declared and paid a quarterly cash dividend on the Company's common stock of $0.035 per share in September 2013.
 
·  
Took delivery of four MR tankers under the Company’s Newbuilding Program, STI Le Rocher and STI Larvotto in July, STI Fontvieille in August and STI Ville in September 2013.  After delivery, each vessel began a time charter for up to 120 days at approximately $19,000 per day.
 
 KEXIM Financing
 
In September 2013, the Company received loan commitments from a group of financial institutions led by DNB Bank ASA and Skandinaviska Enskilda Banken AB (publ) for loan commitments of up to $429.6 million, including a commitment from KEXIM for a commitment of up to $300.6 million (the"KEXIM Tranche").
 
The KEXIM Financing will be used to finance up to 60% of the contract price of 18 newbuilding product tankers upon delivery. The covenants are similar to those in the Company's existing credit facilities, and other terms and conditions of the loan are in accordance with OECD Guidelines. The KEXIM Financing is subject to executed documentation and is expected to close within the fourth quarter of 2013.
 
In addition to KEXIM's commitment of up to $300.6 million, KEXIM has also provided an optional guarantee for a five year amortizing note of $125.3 million (the "KEXIM Guaranteed Note") that may be issued by the Company at the Company's discretion in 2014; the proceeds of which will be used to reduce the $300.6 million KEXIM Tranche.
 
K-SURE Credit Facility
 
In October 2013, the Company received an Acceptance of Insurance Agreement from KSURE covering 95% of an up to $358.3 million KSURE tranche which will be a component of a credit facility of up to $458.3 million that is in the process of being finalized. The KSURE Financing will also include a commercial tranche (the "Commercial Tranche") of up to $100.0 million.
 
The KSURE Financing will be used to finance up to 60% of the contract price of up to 21 newbuilding product tankers upon delivery. The covenants are similar to those in the Company's existing credit facilities, and other terms and conditions of the loan are in accordance with OECD Guidelines. The facility is subject to credit approval from participating financial institutions as well as executed documentation, and is expected to close within the fourth quarter of 2013.
 
 
 
 

 
 
 
Newbuilding agreements
 
In September 2013, the Company reached agreements with certain unaffiliated third parties to issue shares in exchange for the transfer of ownership of four MR product tankers that are currently under construction with SPP Shipbuilding Co., Ltd. of South Korea (“SPP”).  The aggregate purchase price of the four vessels is $151.0 million with approximately 30% of the consideration consisting of the newly issued shares having a valuation based on the fair market value of the shares at the time of issuance.  The new common shares will be issued to Ceres, Valero and a group of institutional investors advised by JP Morgan Asset Management; the remainder of the purchase price will be paid to the shipyard from cash on hand and bank debt.  Deliveries of the vessels are scheduled in the first and the second quarters of 2014.
 
The transaction also includes a time charter-out agreement for each vessel for a fixed daily revenue amount at current market levels plus a profit sharing arrangement whereby earnings in excess of the base time charter rate will be split between the Company and charterer, Valero.  The first vessel delivered will be time chartered-out for 24 months, and the remaining three will each be time chartered-out for 12 months.  The transactions will be completed by way of novation of the existing shipbuilding agreements and remain subject to final documentation.
 
In August 2013, the Company reached an agreement with HMD to construct four product tankers consisting of two 52,000 dwt MR product tankers for approximately $35.0 million each and two Handymax ice class-1A (38,000 dwt) product tankers for approximately $32.0 million each. The MR tankers are scheduled to be delivered in the second quarter of 2015, and the Handymax ice class-1A tankers are scheduled to be delivered in the fourth quarter of 2014.
 
VLGC Newbuilding agreements
 
In October 2013, the Company exercised options with HSHI for the construction of two VLGC for approximately $75.0 million each. These vessels are expected to be delivered in the first quarter of 2016.
 
In July and August 2013, the Company reached agreements with HSHI and DSME for the construction of nine VLGC for approximately $75.6 million each.  These vessels are expected to be delivered in the second, third and fourth quarters of 2015.
 
These vessels are 84,000 cubic meter tankers designed for the carriage of liquefied petroleum gas (“LPG”).
 
Underwritten offering and full exercise of underwriters’ over-allotment
 
In August 2013, the Company closed on the sale of 20 million shares of common stock at an offering price of $9.50 per share. The underwriters also fully exercised their over-allotment option to purchase 3 million additional common shares at the offering price. The Company received aggregate net proceeds of $209.8 million after deducting underwriters’ discounts and offering expenses.
 
Time charter-in update
 
In October 2013, the Company entered into a new time charter-in agreement on an LR1 vessel that is currently time chartered-in.  The new agreement is for two years at $14,525 per day and commenced upon the expiration of the existing charter in September 2013.
 
In August 2013, the Company agreed to time charter-in and took delivery of two 2007 built Handymax product tankers (37,412 dwt and 37,455 dwt, respectively).  The first vessel is time chartered-in for 18 months at $12,500 per day with an option for the Company to extend the charter for an additional year at $13,500 per day. The second vessel is time chartered-in for one year at $12,500 per day with an option for the Company to extend the charter for an additional year at $13,250 per day.
 
In August 2013, the Company declared an option on an LR2 vessel that is currently time chartered-in.  The option period is for six months at $15,000 per day and commences upon the expiration of the existing charter in November 2013
 
 
 
 

 
 
 
In July 2013, the Company agreed to time charter-in and took delivery of a 2008 built, 73,666 dwt LR1 product tanker for one year at $14,000 per day.  This agreement contains an option for the Company to extend the charter for an additional year at $15,000 per day.
 
Conference Call
 
The Company will have a conference call on October 28, 2013 at 12:00 PM Eastern Daylight Time and 5:00 PM Central European Time.
 
Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 (888)-215-7046 (U.S.) or 1 (913)-312-0659 (International).  The conference participant passcode is 6328598. The information provided on the teleconference is only accurate at the time of the conference call, and the Company will take no responsibility for providing updated information.
 
Slides and Audio Webcast:
 
There will also be a simultaneous live webcast over the internet, through the Scorpio Tankers Inc. website www.scorpiotankers.com.  Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.
 
Webcast URL:  http://www.visualwebcaster.com/event.asp?id=96603
 
Current Liquidity
 
As of October 25, 2013, the Company had $381.9 million in cash and $75.5 million available to draw down from its 2010 Revolving Credit Facility.
 
Debt

As of October 28, 2013, the Company’s outstanding debt balance is as follows:

2010 Revolving Credit Facility
  $ -  
million
2011 Credit Facility
    65.2  
million
STI Spirit Credit Facility
    23.4  
million
Newbuilding Credit Facility
    85.3  
million
2013 Credit Facility
    -  
million
           
Total
  $ 173.9  
million
 
Newbuilding Program
 
During the third quarter of 2013, the Company made $255.0 million of installment payments on its newbuilding vessels.  The Company currently has 65 newbuilding vessel orders with HMD, SPP, HSHI and DSME (28 MRs, 14 Handymaxes, 12 LR2s and 11 VLGC).  The estimated future payment dates and amounts are as follows*:
 
Q4 2013   $ 215.7  
million**
Q1 2014     250.3  
million
Q2 2014     397.5  
million
Q3 2014     394.8  
million
Q4 2014     323.1  
million
Q1 2015     134.6  
million
Q2 2015     249.2  
million
Q3 2015     151.1  
million
Q4 2015     197.3  
million
Q1 2016     105.0  
million
Total
  $ 2,418.6  
million***
 
 
 
 

 
 
 
*These are estimates only and are subject to change as construction progresses.
**$47.0 million has been paid prior to the date of this press release.
***Excludes the consideration of newly issued common shares of approximately 30% of the purchase price for four MRs currently under construction with first and second quarter 2014 deliveries.

Explanation of Variances on the Third Quarter of 2013 Financial Results Compared to the Third Quarter of 2012
 
For the three months ended September 30, 2013, the Company recorded net income of $0.7 million compared to a net loss of $12.5 million in the three months ended September 30, 2012.  The following were the significant changes between the two periods:
 
·  
Time charter equivalent, or TCE revenues, a non-IFRS measure, is vessel revenues less voyage expenses (including bunkers and port charges).  TCE revenue is also included herein because it is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company’s performance irrespective of changes in the mix of charter types (i.e., spot charters, time charters, and pool charters), and it provides useful information to investors and management.  The following table depicts TCE revenue for the three months ended September 30, 2013 and 2012:
 
   
For the three months ended September 30,
 
In thousands of U.S. dollars
 
2013
   
2012
 
Vessel revenue
  $ 57,756     $ 28,667  
Voyage expenses
    (1,249 )     (6,304 )
TCE revenue
  $ 56,507     $ 22,363  
 
·  
TCE revenue increased by $34.1 million to $56.5 million as a result of an increase in the average number of operating vessels (owned and time chartered-in) to 42.3 from 20.4 for the three months ended September 30, 2013 and 2012, respectively.  Additionally, the Company experienced an overall increase in time charter equivalent revenue per day to $14,557 per day from $11,926 per day for the three months ended September 30, 2013 and 2012, respectively (see the breakdown of daily TCE averages below).
 
·  
Vessel operating costs increased $4.7 million to $11.1 million from $6.4 million for the three months ended September 30, 2013 and 2012, respectively. This increase was primarily driven by an increase in the Company’s owned fleet to an average of 17.3 vessels from 9.9 vessels for the three months ended September 30, 2013 and 2012, respectively.
 
 
 

 
 
·  
Charterhire expense increased $19.3 million to $31.9 million as a result of an increase in the average number of time chartered-in vessels to 25.0 from 10.5 for the three months ended September 30, 2013 and 2012, respectively.  See the Company’s Fleet List below for the terms of these agreements.
 
·  
Depreciation expense increased $3.0 million to $6.4 million primarily as a result of an increase in the average number of owned vessels to 17.3 from 9.9 for the three months ended September 30, 2013 and 2012.
 
·  
General and administrative expenses increased $3.7 million to $6.5 million.  This increase was driven by (i) a $3.0 million increase in restricted stock amortization (non-cash) and (ii) an overall increase in other general and administrative expenses due to the significant growth in the Company’s fleet and Newbuilding program.
 
·  
Financial expenses decreased $3.7 million to $0.4 million primarily as a result of the one-time write-off of deferred financing fees during the three months ended September 30, 2012 of $3.0 million relating to the amendment signed in July 2012 to extend the availability period of the 2011 Credit Facility to January 2014.
 
 
 

 
 
Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Statement of Profit or Loss
(unaudited)
 
   
For the three months ended September 30,
   
For the nine months ended September 30,
 
In thousands of U.S. dollars except per share and share data
 
2013
   
2012
   
2013
   
2012
 
Revenue
                       
Vessel revenue
  $ 57,756     $ 28,667     $ 154,213     $ 85,278  
                                 
Operating expenses:
                               
Vessel operating costs
    (11,137 )     (6,374 )     (27,635 )     (22,158 )
Voyage expenses
    (1,249 )     (6,304 )     (3,782 )     (19,950 )
Charterhire
    (31,877 )     (12,588 )     (79,345 )     (29,479 )
Depreciation
    (6,377 )     (3,389 )     (16,665 )     (10,213 )
Loss from sale of vessels
    -       (5,879 )     -       (10,404 )
General and administrative expenses
    (6,522 )     (2,815 )     (14,572 )     (8,404 )
Total operating expenses
    (57,162 )     (37,349 )     (141,999 )     (100,608 )
Operating income / (loss)
    594       (8,682 )     12,214       (15,330 )
Other (expense) and income, net
                               
Financial expenses
    (448 )     (4,108 )     (2,323 )     (6,583 )
Realized gain on derivative financial instruments
    3       286       25       286  
Unrealized gain on derivative financial instruments
    118       38       483       38  
Financial income
    400       4       950       6  
Other expenses, net
    -       (49 )     (106 )     (73 )
Total other expense, net
    73       (3,829 )     (971 )     (6,326 )
Net income / (loss)
  $ 667     $ (12,511 )   $ 11,243     $ (21,656 )
                                 
Earnings / (loss) per share
                               
                                 
Basic and diluted
  $ 0.00     $ (0.30 )   $ 0.08     $ (0.54 )


 
 

 
 
 
Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Balance Sheet
(unaudited)
 
   
As of
 
In thousands of U.S. dollars
 
September 30, 2013
   
December 31, 2012
 
Assets
           
Current assets
           
Cash and cash equivalents
  $ 447,368     $ 87,165  
Accounts receivable
    73,961       36,438  
Prepaid expenses and other current assets
    3,871       956  
Inventories
    3,498       2,169  
Total current assets
    528,698       126,728  
Non-current assets
               
Vessels and drydock
    640,855       395,412  
Vessels under construction
    371,236       50,251  
Other assets
    14,045       889  
Total non-current assets
    1,026,136       446,552  
Total assets
  $ 1,554,834     $ 573,280  
                 
Current liabilities
               
Bank loans
    13,754       7,475  
Accounts payable
    9,194       11,387  
Accrued expenses
    3,254       3,057  
Derivative financial instruments
    675       844  
Total current liabilities
    26,877       22,763  
Non-current liabilities
               
Bank loans
    157,543       134,984  
Derivative financial instruments
    309       743  
Total non-current liabilities
    157,852       135,727  
Total liabilities
    184,729       158,490  
                 
Shareholders' equity
               
Issued, authorized and fully paid in share capital:
               
Share capital
    1,888       650  
Additional paid in capital
    1,462,232       519,493  
Treasury shares
    (7,938 )     (7,938 )
Hedging reserve
    (236 )     (329 )
Accumulated deficit
    (85,841 )     (97,086 )
Total shareholders' equity
    1,370,105       414,790  
Total liabilities and shareholders' equity
  $ 1,554,834     $ 573,280  
 
 
 
 

 

 
Scorpio Tankers Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(unaudited)
 
 
For the nine months ended September 30,
 
In thousands of U.S. dollars
2013
   
2012
 
           
Operating activities
         
Net income / (loss)
  $ 11,243     $ (21,656 )
Loss from sale of vessels
    -       10,404  
Depreciation
    16,665       10,213  
Amortization of restricted stock
    6,738       2,598  
Amortization of deferred financing fees
    538       3,844  
Straight-line adjustment for charterhire expense
    7       225  
Unrealized gain on derivative financial instruments
    (483 )     (38 )
      34,708       5,590  
Changes in assets and liabilities:
               
Drydock payments
    (1,448 )     (150 )
Increase in inventories
    (1,328 )     (77 )
Increase in accounts receivable
    (37,523 )     (5,575 )
(Increase)/decrease in prepaid expenses and other current assets
    (2,942 )     129  
(Increase)/decrease in other assets
    (394 )     2,442  
Increase in accounts payable
    1,337       4,413  
(Decrease)/increase in accrued expenses
    (29 )     598  
      (42,327 )     1,780  
Net cash (outflow) / inflow from operating activities
    (7,619 )     7,370  
Investing activities
               
Acquisition of vessels and payments for vessels under construction
    (585,182 )     (176,556 )
Proceeds from disposal of vessels
    -       101,335  
Net cash outflow from investing activities
    (585,182 )     (75,221 )
Financing activities
               
Bank loan repayment
    (24,102 )     (75,989 )
Bank loan drawdown
    52,050       124,173  
Debt issuance costs
    (12,266 )     (2,944 )
Gross proceeds from issuance of common stock
    983,537       27,000  
Equity issuance costs
    (35,531 )     (1,137 )
Purchase of treasury shares
    -       (2,440 )
Dividends paid
    (10,684 )     -  
Net cash inflow from financing activities
    953,004       68,663  
Increase in cash and cash equivalents
    360,203       812  
Cash and cash equivalents at January 1,
    87,165       36,833  
Cash and cash equivalents at September 30,
  $ 447,368     $ 37,645  


 
 

 
 

Scorpio Tankers Inc. and Subsidiaries
Other operating data for the three and nine months ended September 30, 2013 and 2012
(unaudited)

   
For the three months ended September 30,
   
For the nine months ended September 30,
 
   
2013
   
2012
   
2013
   
2012
 
Adjusted EBITDA(1)   (in thousands of U.S. dollars)
  $ 10,830     $ 1,715     $ 35,536     $ 8,098  
                                 
Average Daily Results
                               
Time charter equivalent per day(2)
  $ 14,557     $ 11,926     $ 15,388     $ 12,719  
Vessel operating costs per day(3)
    6,851       6,935       6,656       7,690  
                                 
Aframax/LR2
                               
TCE per revenue day (2)
  $ 10,876     $ 15,809     $ 12,803     $ 10,940  
Vessel operating costs per day(3)
    9,112       7,645       7,799       8,622  
                                 
Panamax/LR1
                               
TCE per revenue day (2)
  $ 13,349     $ 13,613     $ 13,519     $ 14,609  
Vessel operating costs per day(3)
    8,174       7,271       7,570       7,783  
                                 
MR
                               
TCE per revenue day (2)
  $ 17,304     $ 10,972     $ 17,706     $ 11,195  
Vessel operating costs per day(3)
    5,956       6,593       5,930       7,338  
                                 
Handymax
                               
TCE per revenue day (2)
  $ 13,029     $ 11,106     $ 14,246     $ 12,804  
Vessel operating costs per day(3)
    7,157       5,524       6,690       7,414  
                                 
Fleet data
                               
Average number of owned vessels
    17.3       9.9       14.9       10.4  
Average number of time chartered-in vessels
    25.0       10.5       21.1       8.4  
                                 
Drydock
                               
Expenditures for drydock (in thousands of U.S. dollars)
    -       -       -       -  
 
(1)  
See Non-GAAP Measure section below
(2)  
Freight rates are commonly measured in the shipping industry in terms of time charter equivalent per day (or TCE per day), which is calculated by subtracting voyage expenses, including bunkers and port charges, from vessel revenue and dividing the net amount (time charter equivalent revenues) by the number of revenue days in the period.  Revenue days are the number of days the vessel is owned less the number of days the vessel is off-hire for drydock and repairs.
(3)  
Vessel operating costs per day represent vessel operating costs excluding non-recurring expenses (for example insurance deductible expenses for repairs) divided by the number of days the vessel is owned during the period.
 

 
 

 

 
Fleet List as of October 28, 2013
 
Vessel Name
 
Year Built
 
DWT
 
Ice class
 
Employment
 
Vessel type
       
 
Owned vessels
                           
1
STI Highlander
 
2007
 
37,145
 
1A
 
 SHTP (1)
 
Handymax
       
2
STI Amber
 
2012
 
52,000
 
      -
 
SMRP(4)
 
MR
       
3
STI Topaz
 
2012
 
52,000
 
      -
 
SMRP(4)
 
MR
       
4
STI Ruby
 
2012
 
52,000
 
      -
 
SMRP(4)
 
MR
       
5
STI Garnet
 
2012
 
52,000
 
      -
 
SMRP(4)
 
MR
       
6
STI Onyx
 
2012
 
52,000
 
      -
 
SMRP(4)
 
MR
       
7
STI Sapphire
 
2013
 
52,000
 
      -
 
SMRP(4)
 
MR
       
8
STI Emerald
 
2013
 
52,000
 
      -
 
SMRP(4)
 
MR
       
9
STI Beryl
 
2013
 
52,000
 
      -
 
SMRP(4)
 
MR
       
10
STI Le Rocher
 
2013
 
52,000
 
      -
 
SMRP(4)
 
MR
       
11
STI Larvotto
 
2013
 
52,000
 
      -
 
SMRP(4)
 
MR
       
12
STI Fontvieille
 
2013
 
52,000
 
      -
 
SMRP(4)
 
MR
       
13
STI Ville
 
2013
 
52,000
 
      -
 
Spot
 
MR
       
14
Noemi
 
2004
 
72,515
 
      -
 
 SPTP (2)
 
LR1
       
15
Senatore
 
2004
 
72,514
 
      -
 
 SPTP (2)
 
LR1
       
16
STI Harmony
 
2007
 
73,919
 
1A
 
 SPTP (2)
 
LR1
       
17
STI Heritage
 
2008
 
73,919
 
1A
 
 SPTP (2)
 
LR1
       
18
Venice
 
2001
 
81,408
 
 1C
 
 SPTP (2)
 
Post-Panamax
       
19
STI Spirit
 
2008
 
113,100
 
      -
 
SLR2P (3)
 
LR2
       
                               
 
Total owned DWT
   
1,148,520
                   
                               
 
Vessel Name
 
Year Built
 
DWT
 
Ice class
 
Employment
 
Vessel type
Daily Base Rate
 
Expiry (5)
 
 
Time Chartered-In vessels
                       
20
Freja Polaris
 
2004
 
37,217
 
1B
 
 SHTP (1)
 
Handymax
$12,700
 
14-Apr-14
(6)
21
Kraslava
 
2007
 
37,258
 
1B
 
 SHTP (1)
 
Handymax
$12,800
 
18-May-14
(7)
22
Krisjanis Valdemars
2007
 
37,266
 
1B
 
 SHTP (1)
 
Handymax
$12,800
 
14-Apr-14
(8)
23
Jinan
 
2003
 
37,285
 
-
 
 SHTP (1)
 
Handymax
$12,600
 
28-Apr-15
 
24
Iver Progress
 
2007
 
37,412
 
-
 
 SHTP (1)
 
Handymax
$12,500
 
03-Mar-15
(9)
25
Iver Prosperity
 
2007
 
37,455
 
-
 
 SHTP (1)
 
Handymax
$12,500
 
20-Oct-14
(10)
26
Histria Azure
 
2007
 
40,394
 
-
 
 SHTP (1)
 
Handymax
$12,600
 
04-Apr-14
(11)
27
Histria Coral
 
2006
 
40,426
 
-
 
 SHTP (1)
 
Handymax
$12,800
 
17-Jul-14
(12)
28
Histria Perla
 
2005
 
40,471
 
-
 
 SHTP (1)
 
Handymax
$12,800
 
15-Jul-14
(12)
29
STX Ace 6
 
2007
 
46,161
 
-
 
SMRP(4)
 
MR
$14,150
 
17-May-14
(13)
30
Targale
 
2007
 
49,999
 
-
 
SMRP(4)
 
MR
$14,500
 
17-May-14
(14)
31
Ugale
 
2007
 
49,999
 
1B
 
SMRP(4)
 
MR
$14,000
 
15-Jan-14
(15)
32
Gan Triumph
 
2010
 
49,999
 
-
 
SMRP(4)
 
MR
$14,150
 
20-May-14
 
33
Nave Orion
 
2013
 
49,999
 
-
 
SMRP(4)
 
MR
$14,300
 
25-Mar-15
(16)
34
Freja Lupus
 
2012
 
50,385
 
-
 
SMRP(4)
 
MR
$14,760
 
26-Apr-14
(17)
35
Gan-Trust
 
2013
 
51,561
 
-
 
SMRP(4)
 
MR
$16,250
 
06-Jan-16
(18)
36
Usma
 
2007
 
52,684
 
1B
 
SMRP(4)
 
MR
$13,500
 
03-Jan-14
(19)
37
SN Federica
 
2003
 
72,344
 
-
 
 SPTP (2)
 
LR1
$11,250
 
15-May-15
(20)
38
King Douglas
 
2008
 
73,666
     
Spot
 
LR1
$14,000
 
08-Aug-14
(21)
39
Hellespont Promise
2007
 
73,669
 
-
 
 SPTP (2)
 
LR1
$12,500
 
16-Dec-13
(22)
40
FPMC P Eagle
 
2009
 
73,800
 
-
 
 SPTP (2)
 
LR1
$14,525
 
09-Sep-15
 
41
FPMC P Hero
 
2011
 
99,995
 
-
 
SLR2P (3)
 
LR2
$14,750
 
02-May-14
(23)
42
FPMC P Ideal
 
2012
 
99,993
 
-
 
SLR2P (3)
 
LR2
$15,000
 
09-Jan-14
(24)
43
Densa Alligator
 
2013
 
105,708
 
-
 
SLR2P (3)
 
LR2
$16,500
 
17-Sep-14
(25)
44
Khawr Aladid
 
2006
 
106,003
 
-
 
SLR2P (3)
 
LR2
$15,400
 
11-Jul-15
 
45
Fair Seas
 
2008
 
115,406
 
-
 
SLR2P (3)
 
LR2
$16,250
 
31-Jan-14
(26)
46
Pink Stars
 
2010
 
115,592
 
-
 
SLR2P (3)
 
LR2
$16,125
 
10-Apr-14
 
47
Four Sky
 
2010
 
115,708
 
-
 
SLR2P (3)
 
LR2
$16,250
 
02-Sep-14
 
48
Orange Stars
 
2011
 
115,756
 
-
 
SLR2P (3)
 
LR2
$16,125
 
06-Apr-14
 
                               
 
Total time chartered-in DWT
 
1,913,611
                   
                               
 
Newbuildings currently under construction
                     
 
Vessel Name
 
Yard
 
DWT
 
Ice class
     
Vessel type
       
 
Product tankers
                           
                               
49
Hull 2451
 
HMD
(27)
38,000
 
1A
     
Handymax
       
50
Hull 2452
 
HMD
(27)
38,000
 
1A
     
Handymax
       
51
Hull 2453
 
HMD
(27)
38,000
 
1A
     
Handymax
       
52
Hull 2454
 
HMD
(27)
38,000
 
1A
     
Handymax
       
53
Hull 2462
 
HMD
(27)
38,000
 
1A
     
Handymax
       
54
Hull 2463
 
HMD
(27)
38,000
 
1A
     
Handymax
       
55
Hull 2464
 
HMD
(27)
38,000
 
1A
     
Handymax
       
56
Hull 2465
 
HMD
(27)
38,000
 
1A
     
Handymax
       
57
Hull 2476
 
HMD
(27)
38,000
 
1A
     
Handymax
       
58
Hull 2477
 
HMD
(27)
38,000
 
1A
     
Handymax
       
59
Hull 2478
 
HMD
(27)
38,000
 
1A
     
Handymax
       
60
Hull 2479
 
HMD
(27)
38,000
 
1A
     
Handymax
       
61
Hull 2499
 
HMD
(27)
38,000
 
1A
     
Handymax
       
62
Hull 2500
 
HMD
(27)
38,000
 
1A
     
Handymax
       
63
Hull 2389
 
HMD
(27)
52,000
         
MR
       
64
Hull 2390
 
HMD
(27)
52,000
         
MR
       
65
Hull 2391
 
HMD
(27)
52,000
         
MR
       
 
 
 
 

 
 
 
66
Hull 2392
 
HMD
(27)
52,000
         
MR
       
67
Hull 2449
 
HMD
(27)
52,000
         
MR
       
68
Hull 2450
 
HMD
(27)
52,000
         
MR
       
69
Hull 2458
 
HMD
(27)
52,000
         
MR
       
70
Hull 2459
 
HMD
(27)
52,000
         
MR
       
71
Hull 2460
 
HMD
(27)
52,000
         
MR
       
72
Hull 2461
 
HMD
(27)
52,000
         
MR
       
73
Hull 2492
 
HMD
(27)
52,000
         
MR
       
74
Hull 2493
 
HMD
(27)
52,000
         
MR
       
75
Hull S1138
 
SPP
(28)
52,000
         
MR
       
76
Hull S1139
 
SPP
(28)
52,000
         
MR
       
77
Hull S1140
 
SPP
(28)
52,000
         
MR
       
78
Hull S1141
 
SPP
(28)
52,000
         
MR
       
79
Hull S1142
 
SPP
(28)
52,000
         
MR
       
80
Hull S1143
 
SPP
(28)
52,000
         
MR
       
81
Hull S1144
 
SPP
(28)
52,000
         
MR
       
82
Hull S1145
 
SPP
(28)
52,000
         
MR
       
83
Hull S1167
 
SPP
(28)
52,000
         
MR
       
84
Hull S1168
 
SPP
(28)
52,000
         
MR
       
85
Hull S1169
 
SPP
(28)
52,000
         
MR
       
86
Hull S1170
 
SPP
(28)
52,000
         
MR
       
87
Hull S5122
 
SPP
(28)
52,000
         
MR
       
88
Hull S5123
 
SPP
(28)
52,000
         
MR
       
89
Hull S5124
 
SPP
(28)
52,000
         
MR
       
90
Hull S5125
 
SPP
(28)
52,000
         
MR
       
91
Hull S703
 
HSHI
(29)
114,000
         
LR2
       
92
Hull S704
 
HSHI
(29)
114,000
         
LR2
       
93
Hull S705
 
HSHI
(29)
114,000
         
LR2
       
94
Hull S706
 
HSHI
(29)
114,000
         
LR2
       
95
Hull S709
 
HSHI
(29)
114,000
         
LR2
       
96
Hull S710
 
HSHI
(29)
114,000
         
LR2
       
97
Hull S715
 
HSHI
(29)
114,000
         
LR2
       
98
Hull S716
 
HSHI
(29)
114,000
         
LR2
       
99
Hull 5394
 
DSME
(30)
114,000
         
LR2
       
100
Hull 5395
 
DSME
(30)
114,000
         
LR2
       
101
Hull 5398
 
DSME
(30)
114,000
         
LR2
       
102
Hull 5399
 
DSME
(30)
114,000
         
LR2
       
                               
 
Total product tankers DWT
 
3,356,000
                   
                               
 
Vessel Name
 
Yard
 
Vessel size
(cbm)
         
Vessel type
       
 
LPG Carriers
                           
103
Hull 2336
 
DSME
(31)
84,000
         
VLGC
       
104
Hull 2337
 
DSME
(31)
84,000
         
VLGC
       
105
Hull 2338
 
DSME
(31)
84,000
         
VLGC
       
106
Hull S749
 
HSHI
(32)
84,000
         
VLGC
       
107
Hull S750
 
HSHI
(32)
84,000
         
VLGC
       
108
Hull S751
 
HSHI
(32)
84,000
         
VLGC
       
109
Hull S752
 
HSHI
(32)
84,000
         
VLGC
       
110
Hull S755
 
HSHI
(32)
84,000
         
VLGC
       
111
Hull S756
 
HSHI
(32)
84,000
         
VLGC
       
112
Hull S753
 
HSHI
(32)
84,000
         
VLGC
       
113
Hull S754
 
HSHI
(32)
84,000
         
VLGC
       
                               
                               
 
Total LPG carriers (cbm)
 
924,000
                   
                               
 
(1)
This vessel operates in or is expected to operate in the Scorpio Handymax Tanker Pool (SHTP). SHTP is operated by Scorpio Commercial Management (SCM). SHTP and SCM are related parties to the Company.
(2)
This vessel operates in or is expected to operate in the Scorpio Panamax Tanker Pool (SPTP). SPTP is operated by SCM. SPTP is a related party to the Company.
(3)
This vessel operates in or is expected to operate in the Scorpio LR2 Pool (SLR2P). SLR2P is operated by SCM. SLR2P is a related party to the Company.
(4)
This vessel operates in or is expected to operate in the Scorpio MR Pool (SMRP). SMRP is operated by SCM. SMRP is a related party to the Company.
(5)
Redelivery from the charterer is plus or minus 30 days from the expiry date.
(6)
We have an option to extend the charter for an additional year at $14,000 per day.
(7)
We have an option to extend the charter for an additional year at $13,650 per day.
(8)
We have an option to extend the charter for an additional year at $13,650 per day.  The agreement also contains a 50% profit and loss sharing provision whereby we split all of the vessel's profits and losses above or below the daily base rate with the vessel’s owner.
(9)
We have an option to extend the charter for an additional year at $13,500 per day.
(10)
We have an option to extend the charter for an additional year at $13,250 per day.
(11)
We have an option to extend the charter for an additional year at $13,550 per day.
(12)
We have options to extend each  charter for an additional year at $13,550 per day.
(13)
We have an option to extend the charter for an additional year at $15,150 per day.
(14)
We have options to extend the charter for up to three consecutive one year periods at $14,850 per day, $15,200 per day and $16,200 per day, respectively.
(15)
We have an option to extend the charter for an additional year at $15,000 per day.
(16)
We have an option to extend the charter for an additional year at $15,700 per day.
(17)
We have an option to extend the charter for an additional year at $16,000 per day.
(18)
The daily base rate represents the average rate for the three year duration of the agreement.  The rate for the first year is $15,750 per day, the rate for the second year is $16,250 per day, and the rate for the third year is $16,750 per day. We have options to extend the charter for up to two consecutive one year periods at $17,500 per day and $18,000 per day, respectively.
(19)
We have an option to extend the charter for an additional year at $14,500 per day.
(20)
We have an option to extend the charter for an additional year at $12,500 per day.  We have also entered into an agreement with the vessel's owner whereby we split all of the vessel's profits above the daily base rate.
(21)
We have an option to extend the charter for an additional year at $15,000 per day.

 
 
 

 
(22)
We have an option to extend the charter for an additional six months at $14,250 per day.
(23)
We have extended the charter for six months at $15,000 per day beginning in November 2013. Subsequent to that, we have options to extend the charter for two consecutive six month periods at $15,250 per day, and $15,500 per day respectively.
(24)
We have options to extend the charter for two consecutive six month periods at $15,250 per day and $15,500 per day respectively.
(25)
We have an option to extend the charter for one year at $17,550 per day.
(26)
We have options to extend the charter for two consecutive six month periods at $16,500 per day and $16,750 per day, respectively.
(27)
These newbuilding vessels are being constructed at HMD (Hyundai Mipo Dockyard Co. Ltd. of South Korea). 24 vessels are expected to be delivered in 2014 and two vessels in the second quarter of 2015.
(28)
These newbuilding vessels are being constructed at SPP (SPP Shipbuilding Co., Ltd. of South Korea ).  12 vessels are expected to be delivered during the second, third and fourth quarters of 2014 and four in the first and second quarters of 2015.
(29)
These newbuilding vessels are being constructed at HSHI (Hyundai Samho Heavy Industries Co., Ltd.).  Six vessels are expected to be delivered in the third and fourth quarters of 2014 and two in the first quarter of 2015.
(30)
These newbuilding vessels are being constructed at DSME (Daewoo Shipbuilding and Marine Engineering).  Two vessels are expected to be delivered in the fourth quarter of 2014 and two in the second quarter of 2015.
(31)
These newbuilding vessels are being constructed at DSME (Daewoo Shipbuilding and Marine Engineering).  One vessel is expected to be delivered in the third quarter and two in the fourth quarter of 2015.
(32)
These newbuilding vessels are being constructed at HSHI (Hyundai Samho Heavy Industries Co., Ltd.).  Two vessels are expected to be delivered each in the second quarter, third and fourth quarters of 2015 and two in the first quarter of 2016.
 
Business Strategy, Dividend Policy, and Stock Buyback Program

Business Strategy

The Company’s primary objectives are to profitably grow the business and emerge as a major operator of medium-sized tanker vessels and gas carriers.  The Company intends to acquire modern, high-quality tankers and gas carriers through timely and selective acquisitions.  The Company is currently concentrating on product or coated tankers and gas carriers because of the fundamentals of these segments, which the Company believes includes:
·  
increasing demand for refined products and LPG,
·  
increasing ton miles (distance between new refiners and areas of demand), and
·  
reduced order book.

Dividend Policy
 
The declaration and payment of dividends is subject at all times to the discretion of the Company’s board of directors. The timing and amount of dividends, if any, depends on the Company’s earnings, financial condition, cash requirements and availability, fleet renewal and expansion, restrictions in the loan agreements, the provisions of Marshall Islands law affecting the payment of dividends and other factors.
 
On October 28, 2013, the Company’s board of directors declared a quarterly cash dividend of $0.07 per share, payable on December 18, 2013 to all shareholders as of December 3, 2013 (the record date).  On September 25, 2013, the Company paid a quarterly cash dividend on its common stock of $0.035 per share to all shareholders as of September 10, 2013 (the record date).
 
Share Buyback Program

On July 9, 2010, the Company’s board of directors authorized a share buyback program of up to $20 million.  The Company expects to repurchase these shares in the open market, at times and prices that are considered to be appropriate by the Company, but is not obligated under the terms of the program to repurchase any shares.

As of October 28, 2013, the Company has purchased $7.9 million of shares in the open market at an average price of $6.78.
 
 
 

 
 
About Scorpio Tankers Inc.
 
Scorpio Tankers Inc. is a provider of marine transportation of petroleum products worldwide. Scorpio Tankers Inc. currently owns 19 tankers (one LR2 tanker, four LR1 tankers, one Handymax tanker, 12 MR tankers, and one post-Panamax tanker) with an average age of 4.0 years, time charters-in 29 product tankers (eight LR2, four LR1, eight MR and nine Handymax tankers), and has contracted for 65 newbuilding vessels (28 MR, 12 LR2, and 14 Handymax ice class-1A product tankers, and 11 Very Large Gas Carriers), 44 of which are expected to be delivered within 2014, 19 within 2015 and the remaining two in the first quarter of 2016.  Additional information about the Company is available at the Company's website www.scorpiotankers.com, which is not a part of this press release.
 
Non-GAAP Measures
This press release describes adjusted net income and Adjusted EBITDA, which are not measures prepared in accordance with IFRS (i.e. "Non-GAAP" measure).  The Non-GAAP measures are presented in this press release as we believe that they provide investors with a means of evaluating and understanding how the Company's management evaluates the Company's operating performance.  These Non-GAAP measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with IFRS.

Adjusted net income / (loss)
   
For the three months ended September 30,
 
   
2013
   
2012
 
In thousands of U.S. dollars except per share and share data
 
Amount
   
Per share
   
Amount
   
Per share
 
Net income / (loss)
  $ 667     $ 0.00     $ (12,511 )   $ (0.30 )
Adjustments:
                               
Loss from sale of vessels
    -       0.00       5,879       0.14  
Write off of deferred financing fees
    -       0.00       2,977       0.07  
Unrealized gain on derivative financial instruments
    (118 )     (0.00 )     (38 )     (0.00 )
Total adjustments
    (118 )     (0.00 )     8,818       0.21  
Adjusted net income/ (loss)
  $ 549     $ 0.00     $ (3,693 )   $ (0.09 )

    For the nine months ended September 30,  
   
2013
   
2012
 
   
Amount
   
Per share
   
Amount
   
Per share
 
Net income / (loss)
  $ 11,243     $ 0.08     $ (21,656 )   $ (0.54 )
Adjustments:
                               
Loss from sale of vessels
    -       0.00       10,404       0.26  
Write off of deferred financing fees
    -       0.00       2,977       0.07  
Unrealized gain on derivative financial instruments
    (483 )     (0.00 )     (38 )     (0.00 )
Total adjustments
    (483 )     (0.00 )     13,343       0.33  
Adjusted net income/ (loss)
  $ 10,760     $ 0.08     $ (8,313 )   $ (0.21 )
 
Adjusted EBITDA
   
For the three months ended September 30,
   
For the nine months ended September 30,
 
In thousands of U.S. dollars
 
2013
   
2012
   
2013
   
2012
 
Net income / (loss)
  $ 667     $ (12,511 )   $ 11,243     $ (21,656 )
Financial expenses
    448       4,108       2,323       6,583  
Unrealized gain on derivative financial instruments
    (118 )     (38 )     (483 )     (38 )
Financial income
    (400 )     (4 )     (950 )     (6 )
Depreciation
    6,377       3,389       16,665       10,213  
Amortization of restricted stock
    3,856       892       6,738       2,598  
Loss from sale of vessels
    -       5,879       0       10,404  
Adjusted EBITDA
  $ 10,830     $ 1,715     $ 35,536     $ 8,098  
 
 
 
 

 
 
 
Forward-Looking Statements

Matters discussed in this press release may constitute forward-looking statements.  The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business.  Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.  The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation.  The words “believe,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “plan,” “potential,” “may,” “should,” “expect,” “pending” and similar expressions identify forward-looking statements.

The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management's examination of historical operating trends, data contained in our records and other data available from third parties.  Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.

In addition to these important factors, other important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the failure of counterparties to fully perform their contracts with us, the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for tanker vessel capacity, changes in our operating expenses, including bunker prices, drydocking and insurance costs, the market for our vessels, availability of financing and refinancing, charter counterparty performance, ability to obtain financing and comply with covenants in such financing arrangements, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off-hires and other factors. Please see our filings with the Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties.

Scorpio Tankers Inc.
212-542-1616