"What? You mean this isn't free?" This realization that purchases come with price tags seems to have struck Scorpio Tankers (NYSE:STNG) this morning, after the company completed a two-month, 28-ships-long shopping spree for new oil tankers to upgrade its fleet. Solution: It's time to sell more shares.
After placing orders for more than $494 million worth of new vessels, Scorpio's bank account is looking mighty thin. Even with the $230 million in gross proceeds from its February follow-on offering, the company's bank account today can't possibly have more than $317 million or so in it. So to raise the extra cash to pay for its buying binge, Scorpio's heading back to the public markets and floating even more shares.
Twenty-nine million more shares, to be precise, and Scorpio's pricing them at $8.10 apiece, or a bit below the shares' 50-day moving average, but 8% higher than the price it charged last time around. Together, the proceeds of $235 million, plus the money from last month's floatation, plus the money left in Scorpio's bank account, should be enough to cover its shipbuilding tab to date, and even leave a bit left over to buy more ships.
As of today, though, Scorpio shares are dropping, down 3.8% at $8.20.
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