Lower borrowing costs through KEXIM financing
In July 2014, Scorpio Tankers Inc. (STNG) participated in the previously announced offering of $125.2 million in shipping aggregate principal amount of floating rate guaranteed notes due in 2019 (the KEXIM notes). These notes have reduced Export-Import Bank of Korea’s (or KEXIM’s) funding obligations under Scorpio Tankers’ KEXIM credit facility. Also, this will reduce the company’s borrowing costs under such facility by 1.55% per year.
Payment of 100% of all regularly scheduled installments of principal and interest on the KEXIM notes are guaranteed by the Export-Import Bank of Korea, a statutory juridical entity established under the Export-Import Bank of Korea Act of 1969, as amended, in the Republic of Korea.
Unsecured notes offering
Scorpio Tankers recently announced it has priced its $45.0 million public offering of senior unsecured notes due 2017, maturing on October 15, 2017, at an interest rate of 7.50% per year. The interest is payable in arrears on the 15th day of January, April, July, and October of each year, commencing on January 15, 2015. The offering closed on October 31, 2014.
Scorpio Tankers (STNG) has granted the underwriters of the offering a 30-day option to purchase up to an additional $6.75 million of the notes on the same terms and conditions.
With Scorpio Tankers having $84 million in cash, the company intends to use the additional net proceeds from the offering for general corporate purposes and working capital, which may include the acquisition of additional new or secondhand vessels. Meanwhile, the company’s newbuilds are not fully funded and have balance payments in the fourth quarter of 2014 and the first two quarters of 2015.
In connection with this offering, Scorpio Tankers has submitted an application to list the notes on the New York Stock Exchange (or NYSE) under the symbol SBNB.
If the notes are approved for listing, trading on the NYSE is expected to commence within 30 days after the notes are first issued. The notes will be issued in minimum denominations of $25.00 and integral multiples of $25.00 in excess thereof.