Scorpio Tankers to exchange 3% convertibles due 2022

By Taylor Fox

New York, March 19 – Scorpio Tankers Inc. entered into separate, privately negotiated, agreements with holders of its outstanding 3% convertible senior notes due 2022 to exchange the notes for $62.1 million of new 3% convertible senior notes due 2025, according to a news release.

Scorpio also entered into separate, privately negotiated, agreements with investors to issue and sell $76.1 million of new 3% convertible senior notes due May 15, 2025 at par plus interest.

Interest on the new notes will be payable semiannually in arrears on May 15 and Nov. 15 of each year.

Commencing on the new notes issue date, principal will accrete on the principal amount of the new notes to maturity, compounded semi-annually, at a rate equal to 5.52% per annum.

The accreted principal amount at maturity is equal to 125.3% of par, which together with the 3% interest rate, compounds to a yield to maturity of 8.25%.

The new notes are freely convertible at the option of the holder at any time for common shares of the company, and Scorpio may redeem for cash all or any portion of the notes at par plus interest if the volume-weighted average price of its common shares has been at least 125.3% of the conversion price for at least 20 trading days during any 30 consecutive trading day period.

The conversion rate for the notes is initially 26.6617 common shares per $1,000 principal amount of new notes.

Holders who convert their new notes in connection with a make-whole fundamental change will, under certain circumstances, be entitled to a make-whole premium in the form of an increase in the applicable conversion rate.

Holders of the new notes will have the right to require Scorpio to repurchase such holders’ notes if the company undergoes a fundamental change, at par plus interest.

Closing of the offer is expected to occur on or about March 25, subject to customary closing conditions.

Scorpio anticipates $89.1 million of existing notes will remain outstanding.

Scorpio is a New York-based shipping company that operates oil tankers.

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