In addition, Scorpio Services Holding Limited, or SSH, a related party of us and a member of
the Scorpio Group, provides us with certain administrative services pursuant to an Amended Administrative Services Agreement, which may be terminated by us upon two years notice.
Our arrangements with SCM, SSM and SSH are described in further detail below.
Commercial Management
.
SCMs services include securing employment, in the spot market and on time charters,
for our vessels. SCM also manages the Scorpio Group Pools. When our vessels are operating in one of the Scorpio Group Pools, SCM, the pool manager, charges fees of $300 per vessel per day with respect to our LR1/Panamax and Aframax vessels, $250 per
vessel per day with respect to our LR2 vessels, and $325 per vessel per day with respect to each of our Handymax and MR vessels, plus 1.50% commission on gross revenues per charter fixture. These are the same fees that SCM charges other vessel
owners in these pools, including third-party owned vessels. For commercial management of our vessels that are not operating in any of the Scorpio Group Pools, we pay SCM a fee of $250 per vessel per day for each LR1/Panamax and LR2/Aframax vessel
and $300 per vessel per day for each Handymax and MR vessel, plus 1.25% commission on gross revenues per charter fixture.
Technical
Management
.
SSMs services include
day-to-day
vessel operations, performing general maintenance, monitoring regulatory and classification
society compliance, customer vetting procedures, supervising the maintenance and general efficiency of vessels, arranging the hiring of qualified officers and crew, arranging and supervising drydocking and repairs, purchasing supplies, spare parts
and new equipment for vessels, appointing supervisors and technical consultants and providing technical support. We currently pay SSM $685 per vessel per day to provide technical management services for each of our vessels. This fee is based on
contracted rates that were the same as those charged to other, third party vessels managed by SSM at the time the management agreements were entered into.
Administrative Services
.
SSHs administrative services include the provision of administrative staff and office
space, and administrative services, including accounting, legal compliance, financial and information technology services. We reimburse SSH for the reasonable direct or indirect expenses it incurs in providing us with the administrative services
described above. The services provided to us by SSH may be
sub-contracted
to other entities within the Scorpio Group. Further, SSH has agreed, on behalf of itself and other members of the Scorpio Group, that
it will not directly own product or crude tankers ranging in size from 35,000 dwt to 200,000 dwt.
Our Relationship with Scorpio Group and its
Affiliates
We believe that one of our principal strengths is our relationship with the Scorpio Group. Our vessel operations are
managed under the supervision of our board of directors, by our management team and by members of the Scorpio Group, including SCM and SSM. Our relationship with the Scorpio Group provides access to the Scorpio Groups customer and supplier
relationships and their technical, commercial and managerial expertise, which we believe allows us to compete more effectively and operate our vessels on a cost efficient basis. We can provide no assurance, however, that we will realize any benefits
from our relationship with the Scorpio Group.
The Scorpio Group is owned and controlled by the Lolli-Ghetti family, of which Messrs.
Emanuele Lauro, our Founder, Chairman and Chief Executive Officer, and Filippo Lauro, our Vice President, are members. In addition, all of our executive officers serve in similar management positions in certain other companies within the Scorpio
Group, and Mr. Emanuele Lauro and Mr. Robert Bugbee, our Chief Executive Officer and President, respectively, and other members of our senior management have minority equity interests in SSH, a member of the Scorpio Group and the company
that provides us with certain administrative services.