Scorpio Bulkers Inc. has reached agreements with a shipyard in South Korea to modify existing newbuilding contracts for three Capesize Vessels, the company announced today.
The three contracts, two for vessels scheduled for delivery within the first quarter of 2016 and one for a vessel scheduled for delivery within the second quarter of 2016, will now provide for the construction of three LR1 product tankers, two of which will be scheduled for delivery within the second quarter of 2017 and one within the third quarter of 2017.
As a result, the company will incur a loss of approximately $22 million relating to writing down the contracts to their estimated fair market value. Also, upon completion of customary documentation, the LR1 contracts will be reclassified on the balance sheet as assets held for sale. Should the contracts be sold for their current fair market value, the estimated future cash obligations of the company will be reduced by approximately $60 million.
Scorpio Bulkers said it has no plans for further contract conversions.
Scorpio Tankers Inc., a related party, has informed the Scorpio Bulkers that it will not purchase the LR1 vessels.