Scorpio Bulkers Modifies and Sells Shipbuilding Contracts

Maritime Activity Reports, Inc.

December 17, 2014

Scorpio Bulkers Inc. announces agreements to modify and sell existing shipbuilding contracts for six capesize vessels 
Scorpio Bulkers Inc. has reached agreements with shipyards in South Korea and Romania to modify six newbuilding contracts for Capesize bulk carriers into newbuilding contracts for LR2 product tankers. The company has also reached an agreement to sell four of these LR2 newbuilding contracts to Scorpio Tankers Inc., a related party, additionally granting options to Scorpio Tankers Inc. to purchase the two remaining LR2 newbuilding contracts.
The sale price for each of the four LR2 newbuilding contracts is $51 million. The two option contracts, which expire on May 31, 2015, may be exercised by Scorpio Tankers Inc. for a fixed purchase price of $52.5 million for each contract.
The company expects to record an aggregate loss on disposal of approximately $41 million on the four modified newbuilding contracts. The company also expects to record an aggregate loss of approximately $14 million on the potential disposal of the two option modified newbuilding contracts, which will be reclassified on the balance sheet as assets held for sale.
The independent members of the company's board of directors unanimously approved the transaction with Scorpio Tankers Inc.
At the purchase prices indicated above, a sale of all six modified newbuilding contracts will result in an estimated reduction of future cash obligations of approximately $120 million.
Emanuele Lauro, the company's chairman and CEO, commented "We have taken these actions to strengthen our liquidity position. We will continue to be proactive in further strengthening our balance sheet."
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