Scorpio Bulkers Swaps Bulkers for Tankers

zoom Scorpio Bulkers has reached agreements with a shipyard in South Korea to modify existing newbuilding contracts for three Capesize vessels.  The three contracts, two for vessels scheduled for delivery within the first quarter of 2016 and one for a vessel scheduled for delivery within the second quarter of 2016, will now provide for the construction of three LR1 product tankers. Scorpio said that two product tankers will be scheduled for delivery within the second quarter of 2017 and one within the third quarter of 2017. As a result of the switch, Scorpio Bulkers will incur a loss of approximately USD 22 million relating to writing down the contracts to their estimated fair market value. Upon completion of customary documentation, the LR1 contracts will be re-classified on the balance sheet as assets held for sale, the company added. Should the contracts be sold for their current fair market value, the estimated future cash obligations of the company will be reduced by approximately USD 60 million. The company has no plans for any further contract conversions, the bulk owner and operator explained. Scorpio Tankers Inc., a related party, said that it will not purchase the LR1 vessels.