Scorpio Bulkers is looking to ramp up its already aggressive timetable for selling the 40-plus bulkers remaining in its fleet — and it will not rule out en-bloc sales that would further speed up the process.
Scorpio is looking to bring in-house all management functions of the retooled public company, and is already exploring building wind turbine installation vessels (WTIVs) at US shipyards in compliance with the Jones Act cabotage framework and other protocols, executives said during a conference call with equity analysts on Tuesday.
"This is not quite as extreme as [Hernan] Cortes burning his boats when he arrived in the Americas, but it's on that theme — you get the benefit of complete focus," Scorpio president Robert Bugbee said of the rapid sell-off, referring to the Spanish explorers' conquest of Mexico in 1519.
The company is "days" away from signing a contract with Daewoo Shipbuilding & Marine Engineering in South Korea for delivery of its first WTIV newbuilding in 2023, advancing the letter of intent announced in August.
Bugbee said a developing wind market in the US is one of the potentially attractive areas to pursue for a fleet that could eventually number between four and eight WTIVs.
"It could kick off fast depending on what happens in the election in a few days' time," he said.
Chief operating officer Cameron Mackey said the owner already has had preliminary talks related to building at US yards.
"It's not so simple as to say European and Asian competitors will waltz in and do great business," Mackey said. "It will require collaboration and frankly moxie to succeed in the US market."
The New York-listed bulker owner posted a $36.3m loss for the third quarter, amid costs related to its investment in sister company Scorpio Tankers and impairments on two vessel sales.
The Emanuele Lauro-led outfit saw a $1.9m loss for the same period last year.
Investors reacted harshly to the day's news, pushing down Scorpio Bulkers' shares by $2.20 to $12 — a 15% drop — in late-afternoon trading.
TradeWinds reported last week that Scorpio Bulkers' current rate of divesting its kamsarmax and ultramax vessels would place it out of ships by the end of March, having already sold eight units.
Management's remarks on Tuesday concerning interest in large-block sales could move up that timetable even further.
"There is interest that the initial sales have generated — we have received all sorts of interest, I would say," Lauro said.
"There is interest in block sales and we are considering them as well as individual sales — it all depends on what suits."
Executives rejected the notion that the rush to sell will result in receiving lower-than-optimal valuations for the vessels, which are among the most modern in the industry with an average age of some four years.
Such was suggested in an analyst note from Cleaves Securities last week, and repeated in a question on Tuesday from B Riley FBR analyst Liam Burke.
"The last people to know are probably you guys," Bugbee said of the equity analysts, saying the sale-and-purchase market in dry bulk is deep and active.
"We haven't had to appoint any shipbrokers to market individual vessels. All we've done is respond to inbound enquiry. That's a very healthy sign."
In the last quarter, it lost about $3.7m from its $100m bet on its sister company. The outfit also took a $19.6m write-down from marking the 81,600-dwt SBI Sousta (built 2016) as for sale and agreeing to offload the 82,100-dwt SBI Rock (built 2016).
This year's third-quarter result amounted to a $3.12 loss per share, missing analyst consensus by $0.24 per share. But Scorpio Bulkers is still undaunted in its goal to become a major owner of WTIVs.
"Our transition continues, and our conviction towards offshore wind is validated constantly," the Monaco-based company said in a statement.
"We are witnessing an unprecedented alignment of scientific, political and commercial forces, leading to accelerated plans around the world to develop wind energy.
"We are retooling our organisation and our mission to deliver the service that our customers will require."
Going all in on wind?
As previously reported in TradeWinds, Scorpio Bulkers signed a letter of intent on 4 August to have a GustoMSC NG-16000X-design WTIV built at DSME for delivery in 2023.
The unit, which will cost between $280m and $290m, will include a 1,500-tonne leg encircling crane (LEC) from Huisman Equipment BV.
Scorpio Bulkers said the contract will include options to construct up to an additional three units.
The company has sold six other vessels so far, with more to go as part of its rebirth into a different industry. This will leave it — for now — with 42 ships covering the ultramax and panamax asset classes.
