Scorpio Tankers enters $92 million facility with Credit Agricole, SEB

By Jennifer Chiou

New York, Sept. 29 - Scorpio Tankers Inc. said it signed a commitment with Credit Agricole Corporate and Investment Bank and Skandinaviska Enskilda Banken AB for a $92 million credit facility.

According to a news release, the proceeds will be used to partially finance four of the five newbuilding 52,000 DWT product tankers that the company has contracted to be built at the Hyundai Mipo Dockyard in South Korea.

In addition, Scorpio Tankers announced amendments to its existing credit facilities, which include its facilities from 2010 and 2011 as well as its STI Spirit facility.

The company said it amended the financial covenants for all three facilities to change the following:

• The ratio of EBITDA to interest expense will be no less than 2 to 1 beginning with the third fiscal quarter of 2011 until the fourth quarter of 2012, at which time it will increase to 2.5 to 1.0, calculated on a trailing four-quarter basis; and

• Unrestricted cash and cash equivalents cannot be less than $20 million, including up to $5 million in availability under the 2010 facility, until the company owns, directly or indirectly, more than 15 vessels, at which time the amount increases by $750,000 per additional vessel.

This covenant is in place until the fourth quarter of 2012. After that period, unrestricted cash and cash equivalents will at all times be no less than $15 million until the company owns, directly or indirectly, more than 15 vessels, at which time the amount will also increase by $750,000 per additional vessel owned.

As of Sept. 30, the 2010 reducing revolving facility will have $78 million outstanding and $54.9 million available to be drawn down; the 2011 facility will have $34.3 million outstanding and $115 million available to finance up to 50% of the purchase price for vessel acquisitions; and the STI Spirit facility will have $26.5 million outstanding.

Newbuilding credit facility

The new facility's $92 million amount is to be made available in four tranches, one for each vessel, in the amount of $23 million each, which is about 61% of the contracted price for each vessel.

Drawdowns will be available after the first 39% of the contracted price for each vessel is paid by the company.

The company added that the tranche relating to each vessel will be repaid after delivery of that vessel in quarterly installments of $375,000, which equates to a repayment profile of 15.33 years.

The covenants and other conditions are similar to Scorpio Tankers' existing credit facilities.

The previously mentioned four newbuilding product tankers are scheduled for delivery between July 2012 and October 2012, the release noted, adding that the fifth is being negotiated.

The company currently has $134.7 million that remains to be paid on the construction contracts for the four tankers and $33.6 million for the fifth newbuilding.

In July, the company said that its existing facility was converted into a reducing revolving credit facility from a term loan, giving it the ability to pay down the outstanding balance when it has excess cash and reborrow from the total available commitments as needed.

The company is incorporated in the Marshall Islands and transports oil and petroleum products by sea.

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