Jonathan Chappell says the delivery dates attached to six newbuildings penned at two top tier shipyards in South Korea bodes well for the US-quoted shipowner based on a bet that the supply and demand balance in the product tanker segment will have improved by 2014.
After raising $127m through a follow-on equity offering that is believed to have included existing shareholders the analyst is confident that Scorpio will be able to trim existing debt and still cover 10% deposits on $200m worth of orders without breaking a sweat.
“Scorpio has an envious capital structure that should render it as an attractive counterparty for banks in a tight lending environment,” Chappell continued, noting the company will likely seek a fresh bankroll from its lenders.
“We believe Scorpio will garner 60% financing for the newbuilds, roughly $120m, leaving it with excess funds from the recent capital raise that can be used for even more fleet expansion in 2013 [through option exercises or other ships].”
Chappell says the recent fundraiser, orders for cost-efficient tonnage at facilities familiar with ‘eco’ ship designs and a “strong existing bank group” illustrates the value of having “friends with benefits”.
Evercore is hosting investor meetings with Robert Bugbee, who serves as the president of the Manhattan and Monaco-based operator’s president, in New York and Boston on Wednesday and Thursday, respectively.
