Scorpio Buying More Ships... With Shares

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Four months after Scorpio Tankers (NYSE: STNG  ) called a halt to its tanker ship-building program, saying it had "no plans for further newbuilding contracts," and about six weeks after turning 180 degrees and building some new tankers anyway, the Monaco-based tanker operator is -- what else? -- buying more ships.

On Thursday, Scorpio Tankers announced an agreement to buy four new medium-range "MR" product tankers, currently under construction in South Korea, from the unaffiliated third parties who had ordered them. In exchange for transferring ownership of the "newbuildings," Scorpio will issue shares of its own common stock equal to 30% of the value of the ships, paying the balance in cash.

Scorpio puts the price of the four vessels at $151 million total, which works out to approximately $37.75 million per ship -- or about 14% more than similar ships cost, and Scorpio was ordering them directly from the builders back in February. Scorpio may earn part of that difference back, however. As part of its purchase agreement, the company is agreeing to "charter-out" the ships it is buying to one of the companies it is buying them from -- Valero -- for periods of from one to two years.

Scorpio says it expects to receive these new MR tankers over the course of the first and second quarters of 2014.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2646189, ~/Articles/ArticleHandler.aspx, 9/28/2016 10:13:00 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 24 minutes ago Sponsored by:
DOW 18,339.24 110.94 0.61%
S&P 500 2,171.37 11.44 0.53%
NASD 5,318.55 12.84 0.24%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/28/2016 4:02 PM
STNG $4.76 Up +0.06 +1.28%
Scorpio Tankers CAPS Rating: **