Scorpio Tankers to Purchase LR2 Aframax Tanker

Scorpio Tankers Inc. announced that it entered into an agreement to purchase an LR2 Aframax product tanker (approximately 113,100 dead weight tons) for a purchase price of $52.2m. The ship, which is charter free, was built in 2008 and is scheduled to be delivered in November 2010.
 
The agreement also includes two purchase options with the seller. Each option grants the company the right, but not the obligation, to purchase a 2008 built LR1 ice class-1A product tanker (approximately 63,600 dead weight tons) for a price of $45m. Each option can be exercised at any time until September 2011.

Emanuele Lauro, the CEO of Scorpio Tankers, commented, "We are extremely pleased that we were able to capitalize on this unique opportunity. This is the seventh vessel we will have acquired since going public, and it illustrates our strategy of deploying capital in a selective and timely fashion during the trough of the product tanker cycle. We have agreed to acquire a modern coated tanker plus fixed-price options for two additional tankers at very attractive levels relative to recently reported values. Upon delivery of the vessel in November, the average age of our fleet will be approximately 5.1 years."

The vessel will be purchased via a combination of cash on hand and debt. Upon delivery of the vessel, the company's net leverage (debt less cash divided by debt plus book equity less cash) is projected to be approximately 38%.

This purchase will not affect the company's stock buyback plan. To date, 244,146 shares have been purchased under the plan at an average price of $10.85 per share.