Scorpio Tankers Inc. (NYSE:STNG) (“Scorpio”) announced today that
it has entered into definitive agreements to merge with Navig8
Product Tankers Inc. (NOTC: EIGHT) (“Navig8”) and acquire Navig8’s
27 operating product tankers (the “Merger”). Subject to the terms
and conditions of these agreements, Scorpio will acquire four LR1
tankers prior to the closing of the Merger (the “LR1 Vessel
Acquisitions”) and the remaining 23 tankers upon the closing of the
Merger in exchange for the issuance of 55 million shares of Scorpio
common stock to the Navig8 shareholders. In connection with the LR1
Vessel Acquisitions, Scorpio will pay cash consideration of $42.2
million, which is net of assumed debt. This cash is expected to
remain with Navig8 through closing and will form part of the
balance sheet of the combined company, subject to the terms and
conditions of the merger agreement.
Scorpio also announced today the launch of an underwritten
public offering of up to $200.0 million of its shares of
common stock (the “Offering”). Morgan Stanley is acting as sole
book-running manager in the Offering. ABN AMRO, Clarksons
Platou Securities AS, Evercore ISI, Pareto Securities, and Seaport
Global Securities are acting as co-managers. Scorpio also intends
to grant the underwriters a 30-day option to purchase up to $30.0
million additional shares of its common stock. Scorpio
Services Holding Limited, a related party of Scorpio, has indicated
an interest in purchasing at least $20.0 million of Scorpio common
stock in the Offering.
The net proceeds of the Offering are expected to be used to
provide cash to further strengthen Scorpio’s balance sheet and
enhance liquidity, for the payment of costs related to the Merger,
to fund the purchase price of the LR1 Vessel Acquisitions, and the
remainder, if any, for general corporate purposes.
Merger Overview
Through the Merger, Scorpio is acquiring an operating fleet of
27 eco-design product tankers, comprised of 15 LR2s and 12 LR1s
with a weighted average age of 0.9 years and an aggregate carrying
capacity of approximately 2.6 million dwt. Following the completion
of the Merger, on a fully delivered basis, Scorpio’s operating
fleet will consist of 105 owned or finance leased tankers (38 LR2
tankers, 12 LR1 tankers, 41 MR tankers and 14 Handymax tankers)
with a weighted average age of approximately 1.9 years, and 19 time
or bareboat chartered-in tankers (one LR2 tanker, nine MR
tankers and nine Handymax tankers). In addition, as of the date
hereof, Scorpio has contracts for the construction of six
newbuilding MR product tankers, which Scorpio refers to as its
Newbuilding Program. The vessels in Scorpio’s Newbuilding Program
are expected to be delivered to them throughout the remainder of
2017 and first quarter of 2018. Scorpio has also entered into
an agreement to sell two MR product tankers, which is expected to
close in June 2017.
Certain Navig8 shareholders have agreed to vote their Navig8
shares in favor of the Merger, subject to certain exceptions. These
shareholders constitute a majority of Navig8’s outstanding
common shares and, accordingly, it is expected that the
Merger will be approved. In addition, Scorpio will
appoint one additional independent director that will be selected
by Scorpio’s board of directors and to be effective at the closing
of the Merger.
Benefits of the Merger, Upon Completion
• Scorpio will be the largest owner of product tankers listed on
a U.S. securities exchange, with a fully delivered fleet of 105
vessels (38 LR2 tankers, 12 LR1 tankers, 41 MR tankers, and 14
Handymax tankers) with a weighted average age of approximately 1.9
years, and 19 time or bareboat chartered-in tankers (one
LR2 tanker, nine MR tankers and nine Handymax tankers).
• The size of the combined company provides it with substantial
economies of scale:
- Significant presence across adjacent product tanker segments
will provide for enhanced customer relationships and increased
vessel utilization.
- Commercial and operating costs will benefit from scale
efficiencies.
- The availability, terms, and quality of financing will provide
significant advantages compared to its peers.
• Going forward, the combined company’s capitalization, quality
fleet, and the commercial and technical platform of its manager
make it well-positioned to capitalize on further consolidation
opportunities.
The Merger has been unanimously approved by the board of
directors of Scorpio and, based upon the recommendation of a
transaction committee of disinterested directors, unanimously
approved by the board of directors of Navig8. The transaction
committee negotiated the Merger on behalf of Navig8.
Based on Scorpio’s closing price on May 22, 2017, the
consideration reflects a total equity value for Navig8 of
approximately $228.8 million and a total enterprise value of
approximately $1.1 billion, including the assumption of debt.
The completion of the Merger, including the LR1 Vessel
Acquisitions, is subject to the completion of the Offering and
certain customary conditions, including without limitation,
approval of the Merger by holders of a majority of the outstanding
shares of common stock of Navig8 (excluding the LR1 Vessel
Acquisitions), clearance by the U.S. Securities and Exchange
Commission (the “SEC”) of a registration statement to be filed by
Scorpio to register the shares of common stock of Scorpio to be
issued in the Merger (the “New Registration Statement”), and the
listing of such shares on the New York Stock Exchange. The Merger
is expected to close in the second or third quarter of 2017.
Seward & Kissel LLP is serving as legal counsel to Scorpio
in connection with the Merger and Wachtell, Lipton, Rosen &
Katz is serving as legal counsel to the transaction committee of
Navig8. Perella Weinberg Partners LP is serving as financial
advisor to Scorpio’s board of directors and PJT Partners LP is
serving as financial advisor to Navig8. Seward & Kissel
LLP is also serving as legal counsel to Scorpio in connection with
the Offering.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy these securities, nor shall there
be any sale of these securities, in any state or other jurisdiction
in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any
such state or other jurisdiction. This Offering is being made only
by means of a prospectus supplement and accompanying base
prospectus. A prospectus supplement related to the Offering will be
filed with SEC and will be available on the SEC’s website located
at www.sec.gov. When available, copies of the prospectus
supplement and the accompanying base prospectus relating to this
Offering may be obtained from Morgan Stanley, Attn: Prospectus
Department, 180 Varick Street, 2nd Floor, New York, NY
10014.
For further information about the Merger, please refer to the
New Registration Statement to be filed by Scorpio with the SEC.
About Scorpio Tankers Inc.
Scorpio is a provider of marine transportation of petroleum
products worldwide. Scorpio currently owns 78 product tankers (23
LR2, 41 MR tankers and 14 Handymax tankers) with an average age of
2.4 years and time or bareboat charters-in 19 product tankers (one
LR2, nine MR and nine Handymax tankers). Scorpio also has
contracted for six newbuilding MR product tankers which are
expected to be delivered throughout the remainder of 2017 and the
first quarter of 2018. Scorpio has also entered into an agreement
to sell two MR product tankers, which is expected to close in June
2017. Additional information about Scorpio is available at
Scorpio’s website www.scorpiotankers.com, which is not a part
of this press release.
About Navig8 Product Tankers Inc.
Navig8 is a Marshall Islands corporation formed for the purpose
of acquiring and operating LR1 and LR2 tankers with fuel-efficient
specifications and carrying capacities between 74,000 dwt and
113,000 dwt in the international product tanker market. Navig8
currently has a fleet of 27 eco-design product tankers (15 LR2 and
12 LR1 tankers). These vessels were financed through bank debt,
sale leaseback transactions and cash on hand. All of Navig8’s
vessels are operated in pools managed by the Navig8
Group.
Forward-Looking Statements
Matters discussed in this press release may constitute
forward-looking statements. The Private Securities Litigation
Reform Act of 1995 provides safe harbor protections for
forward-looking statements in order to encourage companies to
provide prospective information about their business.
Forward-looking statements include statements concerning plans,
objectives, goals, strategies, future events or performance, and
underlying assumptions and other statements, which are other than
statements of historical facts. Scorpio and Navig8 desire to take
advantage of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 and is including this cautionary
statement in connection with this safe harbor legislation. The
words “believe,” “expect,” “anticipate,” “estimate,” “intend,”
“plan,” “target,” “project,” “likely,” “may,” “will,” “would,”
“could” and similar expressions identify forward-looking
statements.
The forward-looking statements in this press release are based
upon various assumptions, many of which are based, in turn, upon
further assumptions, including without limitation, management’s
examination of historical operating trends, data contained in
company records and other data available from third parties.
Although management believes that these assumptions were reasonable
when made, because these assumptions are inherently subject to
significant uncertainties and contingencies which are difficult or
impossible to predict and are beyond the companies’ control, there
can be no assurance that Scorpio or Navig8 will achieve or
accomplish these expectations, beliefs or projections. The parties
undertake no obligation, and specifically decline any obligation,
except as required by law, to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
In addition to these important factors, other important factors
that, in our view, could cause actual results to differ materially
from those discussed in the forward-looking statements include the
ability of Scorpio and Navig8 to successfully complete the proposed
Merger on anticipated terms and timing, including obtaining
required shareholder and regulatory approvals, unforeseen
liabilities, future capital expenditures, revenues, expenses,
earnings, synergies, economic performance, indebtedness, financial
condition, losses, future prospects, business and management
strategies for the management, expansion and growth of the new
combined company’s operations and other conditions to the
completion of the acquisition, risks relating to the integration of
Navig8’s operations and the possibility that the anticipated
synergies and other benefits of the proposed acquisition will not
be realized or will not be realized within the expected timeframe,
the outcome of any legal proceedings related to the Merger, the
ability of Scorpio to consummate the Offering, the failure of
counterparties to fully perform their contracts with us, the
strength of world economies and currencies, general market
conditions, including fluctuations in charter rates and vessel
values, changes in demand for tanker vessel capacity, changes in
our operating expenses, including bunker prices, drydocking and
insurance costs, the market for our vessels, availability of
financing and refinancing, charter counterparty performance,
ability to obtain financing and comply with covenants in such
financing arrangements, changes in governmental rules and
regulations or actions taken by regulatory authorities, potential
liability from pending or future litigation, general domestic and
international political conditions, potential disruption of
shipping routes due to accidents or political events, vessels
breakdowns and instances of off-hires, and other factors. Please
see Scorpio’s filings with the SEC for a more complete discussion
of certain of these and other risks and uncertainties.
IMPORTANT INFORMATION FOR INVESTORS
In connection with the proposed merger, Scorpio will file with
the SEC a registration statement on Form F–4 that will constitute a
prospectus of Scorpio and include a proxy statement of Navig8.
Scorpio also plans to file other relevant documents with the SEC
regarding the proposed transaction. INVESTORS ARE URGED TO READ THE
PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH
THE SEC IF AND WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION. You may obtain a free copy of the
proxy statement/prospectus (if and when it becomes available) and
other relevant documents filed by Scorpio with the SEC at the SEC’s
website at www.sec.gov.
In addition, you will be able to obtain free copies of these
documents by phone, e–mail or written request by contacting the
investor relations department of Scorpio or Navig8 at the
following:
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Scorpio Tankers
Inc. |
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Navig8 Product Tankers
Inc. |
9, Boulevard Charles
III |
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2nd Floord, Kinnaird
House |
Monaco 98000 |
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1 Pall Mall East,
London |
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SW1Y 5AU |
Attn: Investor
Relations |
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Attn: Investor
Relations |
The issuer has filed a registration statement (including a
prospectus) with the SEC for the offering to which this
communication relates. Before you invest, you should read the
prospectus in that registration statement and other documents the
issuer has filed with the SEC for more complete information about
the issuer and this offering. You may get these documents for free
by visiting EDGAR on the SEC Web site at www.sec.gov.
NO OFFER OR SOLICITATION
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S.
Securities Act of 1933, as amended.
Scorpio Tankers Inc.
212-542-1616
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